Benchmark indices ended little lower on Friday after the Reserve Bank of India kept interest rates unchanged, while investors assessed the central bank’s outlook on inflation, growth and the rupee.
The S&P BSE closed 116.67 points lower, or 0.16%, at 74,243.34, while the NSE Nifty50 fell 49.85 points, or 0.21%, to settle at 23,366.70.
The market witnessed a volatile session after the maintained the repo rate at 5.25%, a move that was largely in line with expectations. While the policy decision did not trigger any major market reaction, investors remained cautious amid concerns over inflation, foreign investor outflows and the ongoing geopolitical tensions in West Asia.
Vinod Nair, Head of Research, Geojit Investments Limited, said that equities closed flat as the monetary policy outcome aligned with expectations, while supportive measures announced by the helped strengthen the rupee.
“However, the downward revision in growth forecasts and a calibrated inflation outlook prompted profit booking as investors reassessed nearterm demand and earnings prospects. Though the currency’s gains may support sentiment in the near term, inflationary pressures and a firm bondyield environment are expected to weigh on both foreign and domestic inflows,” he added.
The RBI’s decision to leave interest rates unchanged was widely anticipated by the market.
Investors were more focused on the central bank’s commentary regarding inflation and economic growth after the recent surge in prices due to tensions in the Middle East.
The policy outcome failed to provide a fresh trigger for equities, leading to a largely range-bound session on Dalal Street.
Market participants are now assessing whether the central bank may be forced to tighten monetary policy later in the year if inflationary pressures persist.
One of the biggest highlights of the day was the sharp recovery in the Indian currency.
The rupee surged 0.9% to close at 94.9450 against the US dollar, compared with 95.7850 in the previous session.
The gain marked the rupee’s strongest single-session performance since April 2 and came after investors welcomed policy measures and signals aimed at supporting capital inflows and stabilising the currency.
The recovery in the rupee offered some relief to markets, which have been grappling with concerns over sustained depreciation and record foreign investor outflows.
Among Sensex stocks, Hindustan Unilever emerged as the top gainer, rising 2.10%.
Axis Bank gained 1.86%, while Adani Ports advanced 1.82%. Bajaj Finance climbed 1.75% and Asian Paints added 0.88%.
Eternal also gained 0.85%, while Mahindra & Mahindra rose 0.83%.
On the losing side, Trent was the biggest laggard, falling 2.21%.
TCS declined 1.85%, Tata Steel lost 1.78%, Infosys slipped 1.76% and Bajaj Finserv fell 1.13%.
The weakness in IT stocks continued to weigh on benchmark indices, with both TCS and Infosys among the top drags on the Sensex.
Broader markets also ended in the red.
The Nifty Midcap 100 fell 0.35%, while the Nifty Smallcap 100 slipped 0.06%.
India VIX, the market’s fear gauge, eased 0.61% to 15.79, indicating slightly lower volatility expectations.
Sectoral performance remained mixed.
Nifty Media was the standout performer, rising 3.48%.
Nifty Realty gained 0.56%, Nifty Healthcare advanced 0.56%, and Nifty PSU Bank climbed 0.48%.
Nifty Pharma rose 0.29%, while Nifty Financial Services added 0.12%.
On the downside, Nifty Metal was the worst-performing sector, falling 1.60%. Nifty IT declined 0.99%, extending its recent weakness. Nifty FMCG slipped 0.18%, while Nifty Oil & Gas lost 0.48%.
Oil prices remained under watch as investors tracked developments in West Asia.
Brent crude fell 0.17% to $94.87 per barrel, while WTI crude slipped 0.35% to $92.71 per barrel.
Although the moderation in oil prices offered some relief, investors remain concerned that any escalation in tensions involving the US, Iran and regional allies could push crude prices higher again and reignite inflation pressures.
With the RBI policy now behind them, investors will turn their attention to inflation data, foreign fund flows, movements in crude oil prices and developments in West Asia.
The sustainability of the rupee’s recovery and any signs of easing geopolitical tensions are likely to remain key drivers for Indian equities in the coming weeks.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)