Benchmark indices Sensex and Nifty50 reversed their earlier gains on Wednesday, closing the session in the red after the Reserve Bank of India (RBI) announced no changes to interest rates.
The Sensex ended the day 167.71 points lower at 81,467.10, while the Nifty50 declined by 31.20 points, finishing at 24,981.95.
Out of the Nifty companies, 31 showed advances and 19 recorded declines. Top gainers were Cipla, Trent, Tata Motors, SBI, and Tech Mahindra, which helped the index from a steeper fall. While ITC, Nestle India, ONGC, Reliance, and Hindustan Unilever were the top losers, dragging the markets down.
The market downturn followed a decision from the RBI’s Monetary Policy Committee (MPC) to maintain the repo rate at 6.5%, marking the tenth consecutive meeting with no change. The committee also shifted its stance from ‘withdrawal of accommodation’ to a neutral position, reflecting a cautious approach towards future monetary policy.
This adjustment aligns with global economic trends, particularly in the wake of the US Federal Reserve’s recent 50 basis point rate cut. Analysts predict that the RBI’s move could pave the way for potential rate cuts in future meetings, possibly as early as December.
The central bank remains focused on managing liquidity and curbing inflation, particularly in response to rising prices in food and metals. Despite these challenges, the RBI has maintained its GDP growth forecast for FY25 at 7.2%, highlighting the country’s economic resilience.
Geopolitical concerns, particularly tensions in the Middle East, continue to pose risks, especially for sectors like gems and jewellery, which could face trade disruptions.
Vinod Nair, Head of Research at Geojit Financial Services, said that an upward revision in Q3FY25 inflation indicates persistent inflation concerns, prompting some investors to lock in profits. “Volatility in input costs and its effect on margins weighed on FMCG stocks. While the RBI’s neutral stance was expected, the commentary did not signal a near-term rate cut. However, the broad market remains buoyant, with investors looking to capitalize on recent corrections,” Nair added.
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