RBI's Rate Cut Spurs Indian Stock Market Decline

The Indian stock market closed in the red after the RBI reduced the repo rate by 25 basis points, aiming to bolster economic growth amid global challenges. While some sectors benefit, investors remain wary, assessing the impact of these monetary policy changes.

The Indian stock market experienced a downturn on Friday in the wake of the Reserve Bank of India's decision to reduce the repo rate by 25 basis points, lowering it to 6.25 percent. This rate cut, the first in over five years, is a strategic attempt to stimulate economic growth against a backdrop of global uncertainties.

The BSE Sensex dropped by 197.97 points, closing at 77,860.19, while the NSE Nifty fell 43.40 points to 23,559.95. In the Nifty 50, 28 stocks gained ground as 23 saw declines. Tata Steel, ITC Hotels, Bharti Airtel, JSW Steel, and Trent emerged as top performers, whereas ITC, SBI, Britannia, Adani Ports, and TCS ranked among the largest losers.

Financial expert and Co-Founder of Stock Market Today, VLA Ambala, explained the market's reaction, noting that the RBI's rate reduction is aimed at boosting market liquidity, benefiting sectors like real estate by likely spurring housing sales. Though expected to relieve interest-sensitive industries, investors remain cautious in evaluating the broader economic implications. Meanwhile, the RBI maintained India's CPI inflation forecast for FY25 at 4.8% and FY26 at 4.2%, with December 2024's rate dropping to 5.22% due to falling food prices.