CHENNAI: Indian equity markets staged a sharp recovery and ended the session on a strong note Friday, buoyed by the Reserve Bank of India's (RBI) unexpected 50 basis points repo rate cut — a move that boosted investor sentiment and triggered broad-based buying.
After a choppy start, the benchmark Sensex surged to an intraday high of 82,299.89 before settling at 82,189, up 746.95 points, or 0.92%. The Nifty50 also closed firmly above the 25,000-mark at 25,003.05, rising 252.15 points, or 1.02%.
The bullish momentum was mirrored across broader markets, with the Nifty MidCap and Nifty SmallCap indices advancing 1.28% and 0.92%, respectively.
The rally was triggered by the RBI’s Monetary Policy Committee (MPC), which delivered a surprise 50-bps repo rate cut, bringing the benchmark lending rate down amid rising global growth concerns. In a shift in tone, the central bank also moved its policy stance from 'Accommodative' to 'Neutral'. To support systemic liquidity, the RBI also announced a phased 100-basis-point cut in the Cash Reserve Ratio (CRR).
Despite the aggressive front-loading of policy support, RBI Governor Sanjay Malhotra signaled limited room for further rate cuts in the near term, even as he confirmed unanimous MPC backing for the current stance.
Sectoral Highlights
Rate-sensitive sectors were the day's standout performers. The Nifty Realty index jumped nearly 5%, fueled by hopes of lower borrowing costs, while the Nifty Bank index climbed 1.5%, hitting a fresh all-time high of 56,650.
The Nifty Auto index also gained 1.4%, led by strong buying in passenger and two-wheeler stocks.
Top movers in the rally were financial stocks. Finacial service companies with exposure to gold loans soared after the RBI indicated a potential relaxation in proposed gold loan norms. Active players in this segment -- Muthoot Finance surged 6.6%, and Manappuram Finance rose 3%.
The surprise rate cut and liquidity support measures lifted market sentiment across the board, even as global markets remained cautious ahead of next week's US inflation data and Federal Reserve policy decision.
Outlook
While Friday’s rally has restored near-term bullishness, analysts caution that markets may now turn to macro data and global cues for direction, especially given the RBI’s indication of limited further easing.