Benchmark equity indices surged on Friday, with the Sensex climbing 746.95 points and Nifty reclaiming the 25,000-level after the RBI cut interest rates by more-than-expected 50 basis points -- a third consecutive reduction -- and reduced the cash reserve ratio for banks to provide a major liquidity fillip to support the economy amid geopolitical and tariff headwinds.
Recovering all the early lost ground, the 30-share BSE Sensex jumped 746.95 points, or 0.92 per cent, to settle at 82,188.99. During the day, it surged 857.85 points, or 1.05 per cent, to 82,299.89.
The 50-share NSE Nifty reclaimed the 25,000-level and climbed 252.15 points, or 1.02 per cent, to settle at 25,003.05.
Interest-rate-sensitive realty index jumped 4.74 per cent, while auto index went up 1.50 per cent and bankex climbed 1.25 per cent. The Reserve Bank of India’s (RBI’s) six-member monetary policy committee, headed by Governor Sanjay Malhotra and consisting of three external members, voted five to one to lower the benchmark repurchase or repo rate by 50 basis points to 5.5 per cent.
It also cut the cash reserve ratio by 100 basis points to 3 per cent, adding `2.5 lakh crore to already surplus liquidity in the banking system.
With the latest reduction, the RBI has cut interest rates by a total of 100 basis points in 2025, starting with a quarter-point reduction in February — the first cut since May 2020 — and another similar-sized cut in April.
The central bank, at the same time, changed its monetary policy stance to “neutral†from accommodative, with Malhotra saying further action will depend on incoming data.
“The Indian stock market responded optimistically to the RBI’s surprise and aggressive growth push policy. The tremendous rate cut and liquidity boost via the CRR cut is expected to facilitate swift transmission of lower rates, reinforcing the RBI’s strong commitment to fostering economic growth, boosting investment, and stimulating consumption. “Rate-sensitive sectors, including banking, real estate, automobiles, and consumer durables are leading the rally,†Vinod Nair, Head of Research, Geojit Investments Ltd, said.
From the Sensex firms, Bajaj Finance surged 4.93 per cent and Axis Bank climbed 3.15 per cent.
Maruti, IndusInd Bank, Bajaj Finserv, Eternal, Mahindra & Mahindra, Tata Steel, Kotak Mahindra Bank, Titan, HDFC Bank, and NTPC were among the other major gainers. Bharti Airtel and Sun Pharma were the laggards.
“A third straight cut in repo rates this year with 50 bps cut instead of an estimate of 25 bps is a pleasant move. This demonstrates a pro-growth stance and a front-loading of rate cuts given our stable economic growth and declining inflation. A change in policy stance from accommodative to neutral is also justified as it can help to strike a right balance between growth and inflation, especially if geopolitical issues escalate further,†Umeshkumar Mehta, CIO, SAMCO Mutual Fund, said.
The central bank lowered its inflation projection to 3.7 per cent for 2025-26 from 4 per cent earlier.
In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225 index and Shanghai’s SSE Composite index settled in the positive territory while Hong Kong’s Hang Seng ended lower.
European markets were on a mixed note.
US markets ended lower on Thursday.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 208.47 crore on Thursday, according to exchange data.
Global oil benchmark Brent crude dipped 0.46 per cent to USD 65.04 a barrel.
On Thursday, the 30-share BSE Sensex climbed 443.79 points, or 0.55 per cent, to settle at 81,442.04. The Nifty rose 130.70 points, or 0.53 per cent, to 24,750.90.
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