Markets In Red After RBI’s Neutral Stance

An upward revision in Q3FY25 inflation reiterates that the sticky inflation continues to remain a concern for the RBI and led investors to book profit towards the close. The volatility in input prices and the impact on margin dragged the FMCG stocks, said Vinod Nair, head (research), Geojit Financial Services

Mumbai: Benchmark Sensex reversed its gains and closed lower by 167 points on Wednesday due to profit-taking in select blue-chips in the last hour even as the RBI took the first step towards a rate cut in its monetary policy review.

Erasing its early gains, the 30-share BSE Sensex fell 167.71 points or 0.21 per cent to close at 81,467.1. The index opened higher and later surged 684.4 points to hit an intraday high of 82,319.21 as RBI Governor Shaktikanta Das left the interest rate unchanged, but changed the stance to neutral. However, sharp gains in blue-chips attracted profit taking by cautious investors ahead of the start of earnings season on Thursday. The NSE Nifty dropped 31.20 points or 0.12 per cent to end at 24,981.95. In the intraday trade, it jumped 220.9 points or 0.88 per cent to hit a high of 25,234.05.

“An upward revision in Q3FY25 inflation reiterates that the sticky inflation continues to remain a concern for the RBI and led investors to book profit towards the close. The volatility in input prices and the impact on margin dragged the FMCG stocks,” Vinod Nair, head (research), Geojit Financial Services.

Interest rate-sensitive auto, banking, realty and financial services stocks rallied post-RBI monetary policy decision.

“Markets lost ground in the second half and slipped into the red on selective profit-taking as investors resorted to caution in the run-up to the start of the second quarter earnings season,” Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

A total of 2,705 stocks advanced, while 1,248 declined and 96 remained unchanged on the BSE. The change in RBI’s stance to neutral was favourable and expected, but the commentary is not pointing to a rate cut in the near term, Nair added.

The Reserve Bank of India (RBI) kept its key interest rate unchanged on Wednesday, but took the first step towards a rate cut as it eased its relatively hawkish policy stance to ‘neutral’. The monetary policy committee, which included three RBI officials and an equal number of new external members, voted five-to-one to keep the benchmark repurchase or repo rate - which governs the interest rate of home, auto, corporate and other loans - at 6.5 per cent for a 10th straight policy meeting.

Among the 30 Sensex companies, ITC, Nestle India, Hindustan Unilever, Reliance Industries, Larsen & Toubro and HDFC Bank were among the major laggards. On the contrary, Tata Motors, Tech Mahindra, State Bank of India, Maruti Suzuki India, Bajaj Finance, Axis Bank, Bajaj Finserv and Bharti Airtel were among the gainers.

Mcap rises Rs 2.64 lakh cr

However, the market capitalization (mcap) of BSE-listed companies rose Rs2.64 lakh crore to Rs462,14,144.39 cr (Rs462.14 lakh cr or $5.50 trn) on Wednesday