BSE Sensex and Nifty Remain Steady After RBI Repo Rate Cut
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Synopsis
On February 7, the Indian stock market showed minimal movement after the Reserve Bank of India announced a 25 basis points cut in the repo rate. While metal stocks gained, declines in major firms kept the indices steady.
Key Takeaways
- RBI cuts repo rate by 25 bps
- Sensex down 112 points, Nifty down 18.30 points
- Metal stocks rise over 2%
- GDP growth forecast at 6.7% for 2025-26
- Inflation outlook remains positive
Mumbai, Feb 7 (NationPress) The Indian stock market on Friday remained largely unchanged following the Reserve Bank of India (RBI)'s announcement of a 25 basis points (bps) reduction in the repo rate.
The BSE Sensex was down by 112 points or 0.14 percent, trading at 77,945, while the Nifty stood at 23,585, experiencing a drop of 18.30 points or 0.08 percent during intra-day trading.
Both indices showed minimal fluctuations as the gains in metal stocks were counterbalanced by declines in ITC Ltd, Reliance Industries Ltd, along with some banking and financial shares.
The Nifty Metal index surged over 2 percent after the RBI Governor indicated that manufacturing activity in the country is currently at a peak.
This marks the first rate cut by the central bank since May 2020. The decision was made by the Monetary Policy Committee (MPC), chaired by the new RBI Governor, Sanjay Malhotra, who maintained a neutral policy stance.
“The MPC observed that inflation has decreased. Given a positive outlook on food and the ongoing impact of previous monetary policy measures, it is anticipated to further moderate in 2025-26, gradually aligning with the target,” stated Sanjay Malhotra, RBI Governor.
The RBI has projected India's GDP growth rate at 6.7 percent for the financial year 2025-26.
It anticipates economic growth of 6.7 percent in the first quarter, 7 percent in the second, and 6.5 percent in both the third and fourth quarters.
The central bank indicated that the risks to growth remain evenly balanced.
A report from Nomura suggests that a 5 percent depreciation in the rupee could raise Consumer Price Index (CPI) inflation by 0.26 percentage points, core inflation by 0.10 percentage points, and GDP growth by 0.20 percentage points.
“Nevertheless, due to weak global demand and sluggish domestic consumption, the effect of currency fluctuations on inflation and exports may be restricted this time,” the report concluded.
