Indian Benchmark Indices Rise After RBI Cuts Repo Rate to 5.25%

Market Update at 12:30 PM: Indian equity markets traded higher on Friday, December 5, following the Reserve Bank of India’s (RBI) surprise rate cut. The Monetary Policy Committee (MPC), led by RBI Governor Sanjay Malhotra, decided to slash the repo rate by 25 basis points to 5.25 per cent, signaling a supportive stance for growth.

At 12 PM, the BSE Sensex was trading at Rs 85,564.35, up 299.03 points or 0.35 per cent, while the NSE Nifty50 quoted Rs 26,131.90, gaining 98.15 points or 0.38 per cent. Despite the broader rally, some major Sensex constituents such as Reliance, Trent, Tata Steel, Bharti Airtel, Tata Motors PV, Sun Pharma, and Titan witnessed declines. On the upside, Eternal, BEL, Maruti Suzuki, Bajaj Finance, Kotak Bank, Infosys, and Ultratech Cement emerged as the Top Gainers.

In the broader market, the Nifty MidCap index slipped 0.07 per cent, and the Nifty SmallCap index declined 0.30 per cent. Among sectoral indices, Nifty Pharma and Metal were the Top Losers, down 0.3 per cent each, while the Nifty Realty index led gains, rising 0.28 per cent.

The rate cut by the RBI is expected to boost liquidity and support consumption and investment, potentially driving further positive momentum in the markets.

Market Update at 9:50 AM: India’s benchmark indices opened slightly weaker on Friday as investors remained divided over the Reserve Bank of India’s upcoming policy decision. Strong economic growth and a weakening rupee have complicated expectations for a possible rate cut.

The Nifty fell 0.13 per cent to 25,999.8, while the Sensex slipped 0.16 per cent to 85,125.48 at 9:15 a.m. IST. Ten of the 16 major sectors opened in the red. Rate-sensitive financials declined 0.3 per cent, and auto, realty and consumer stocks eased 0.1 per cent each. Broader indices, including Small-Caps and Mid-Caps, were largely flat.

The RBI is scheduled to announce its policy decision at 10:00 a.m. IST. A Reuters poll earlier projected a 25-basis-point cut in the policy repo rate ahead of the GDP data released last month. However, expectations have cooled after India’s economy delivered its fastest growth in 18 months during the September quarter, driven by stronger consumer spending. Retail inflation also declined to a record low in October, while the rupee’s recent slide has increased caution among policymakers.

Pre-Market Update at 7:40 AM: Indian equity markets are expected to begin Friday, December 5, on a subdued note as investors await the Reserve Bank of India’s monetary policy decision. GIFT Nifty hovered near the 26,033 level, showing a small premium of about 3 points over the previous Nifty futures close, indicating a flat start for the benchmarks.

Asian markets traded lower in early hours, while U.S. markets closed mixed overnight. Rising expectations of a U.S. Federal Reserve interest-rate cut supported sentiment but failed to lift global cues meaningfully. The RBI’s Monetary Policy Committee, led by Governor Sanjay Malhotra, is widely expected to keep the repo rate unchanged at 5.50 per cent.

Russian President Vladimir Putin arrived in New Delhi on December 4 for a two-day visit to attend the 23rd India–Russia Annual Summit. He is scheduled to meet Prime Minister Narendra Modi to discuss key bilateral, regional, and global issues.

In regulatory developments, SEBI has proposed a new risk-aligned method for calculating position limits in equity index options. Instead of total contract value, the regulator suggests using delta-adjusted positions, allowing trading members to hold up to 15 per cent of total market-wide positions in equity index options.

Institutional flows continued to diverge. On Thursday, December 4, Foreign Institutional Investors were net sellers, offloading equities worth Rs 1,944.19 crore, while Domestic Institutional Investors remained strong buyers with net inflows of Rs 3,661.05 crore — marking their 30th consecutive session of positive activity.

Markets closed higher on Thursday as IT stocks led gains, supported by a weaker rupee and optimism over a potential U.S. rate cut next week. The Nifty 50 rose 47.75 points (0.18 per cent) to reclaim the 26,000 mark at 26,033.75, while the Sensex gained 158.51 points (0.19 per cent) to close at 85,265.32. India VIX eased 3.5 per cent. Seven of the eleven sectoral indices ended in the green, with Nifty IT jumping 1.41 per cent. However, broader markets underperformed as the Nifty Midcap 100 and Nifty Smallcap 100 ended lower.

Wall Street ended mixed on Thursday. The Dow Jones slipped 31.96 points (0.07 per cent) to 47,850.94, while the S&P 500 advanced 7.40 points (0.11 per cent) to 6,857.12. The Nasdaq Composite gained 51.04 points (0.22 per cent) to 23,505.14. Major movers included Nvidia (up 2.12 per cent), Meta (up 3.4 per cent), Salesforce (up 3.7 per cent) and Tesla (up 1.73 per cent). Amazon fell 1.4 per cent, and Apple dropped 1.21 per cent.

U.S. jobless claims fell sharply, sliding by 27,000 to 191,000 for the week ending November 29 — the lowest since September 2022 and well below expectations of 220,000.

Japanese government bond yields continued to rise, with the 10-year JGB touching 1.94 per cent — the highest in 18 years — and on track for its biggest weekly increase since March.

The U.S. dollar hovered near a five-week low, with the dollar index stable at 99.065, amid expectations of a Fed rate cut. Gold prices were steady, with spot gold slightly lower at USD 4,203.89 per ounce, while U.S. futures dipped to USD 4,233.60 per ounce.

Crude oil traded flat. Brent crude rose 0.09 per cent to USD 63.32 per barrel and WTI edged up 0.07 per cent to USD 59.71, supported by expectations of a Fed rate cut, rising U.S.–Venezuela tensions and halted peace talks in Moscow.

For today, Sammaan Capital and Bandhan Bank will remain on the F&O ban list.

Disclaimer: The article is for informational purposes only and not investment advice.