Stock market today: Indian indices – Sensex and Nifty 50 – rallied in Friday’s trading session after the Reserve Bank of India (RBI) held the repo rates unchanged at 5.25%.
jumped 300 points, climbing above 74,500 mark, meanwhile, Nifty 50 was trading near 23,500 mark. Bank Nifty also rose over 250 points to 54,572.
Market sentiment across sectors remained largely upbeat, with most Nifty indices advancing during the session. Nifty Media led the gains, rising more than 3%, while Realty and Financial Services also posted strong performances. Banking, PSU Bank, and Consumer Durables stocks witnessed healthy buying interest. In contrast, Metal, FMCG, IT, and Oil & Gas indices edged lower, reflecting mild profit-taking in defensive and commodity-oriented segments.
According to Santosh Meena, Head of Research at Swastika Investmart, the Indian stock market reacted with a mild positive relief rally as the widely expected rate hold removed uncertainty. and Sensex rose modestly (around 0.2-0.4%) post-announcement, with support in rate-sensitive sectors like banking, NBFCs, real estate, and autos due to stable borrowing costs.
Key factors driving the Indian stock market
1] RBI MPC Meeting
On Friday, India’s central bank left the policy repo rate unchanged at 5.25%, despite inflation concerns and growing tensions in the Middle East.
2] Govt exempts FIIs on G-sec bonds and capital gains
The Indian government on Friday announced a capital gains tax exemption for foreign institutional investors and the Bank for International Settlements on income generated from interest payments or the sale of government securities.
The move, outlined in a government statement, is intended to attract more stable foreign investment flows at a time when the rupee has depreciated by more than 5% this year, pressured by higher oil prices and persistent outflows from the equity market.
“The FII tax benefits added a positive catalyst for broader foreign sentiment and liquidity. Overall, the outcome supports a neutral-to-positive near-term outlook with range-bound trading, though volatility may persist based on global cues, inflation data, and Governor’s full commentary tone. Long-term, policy stability and tax measures could aid valuations if external risks are managed,” said Meena.
3] Rupee rebound
The rupee strengthened by 11 paise to 95.63 against the US dollar in early trading on Friday, as investors awaited the Reserve Bank of India’s policy announcement and drew optimism from positive developments in India-US trade negotiations.
Forex market participants noted that the 96 level continues to be a key resistance zone for the USD/INR pair. They added that if the RBI adopts a cautious stance on inflation and currency stability in its policy review, the rupee could gradually appreciate towards the 95.00–95.20 range in the near term.
4] Inflation forecast
RBI has raised its projection for FY27 to 5.1%, up from the earlier estimate of 4.6%. The central bank expects inflation to average 4.2% in Q1, 5.1% in Q2, 5.9% in Q3, and 5.4% in Q4.
RBI Governor Sanjay Malhotra said core inflation is likely to stand at 4.7% during FY2026-27. However, he cautioned that the inflation outlook remains vulnerable to several upside risks that could push price pressures higher.
5] GDP forecast
The FY27 GDP growth projection has been revised downward to 6.6% from 6.8%, reflecting concerns that elevated energy prices, disruptions in global trade, and risks associated with the monsoon could weigh on economic activity.
“From a market perspective, the absence of a rate hike provides relief to interest-rate-sensitive sectors such as banking, NBFCs, real estate, and automobiles. However, the higher inflation outlook and reduced growth forecast suggest that future monetary easing may be limited,” said Seema Srivastava, Senior Research Analyst at SMC Global Securities.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.