Equity benchmark indices Sensex and Nifty ended lower on Friday (February 7, 2025) as the RBI’s rate cut did not spring any major surprise for the markets and investors turned to profit-taking amid foreign fund outflows.
Registering its third day of decline, the 30-share BSE benchmark Sensex dropped 197.97 points or 0.25% to settle at 77,860.19, in a volatile trade. During the day, it lost 582.42 points or 0.74% to 77,475.74.
The NSE Nifty declined 43.40 points or 0.18% to 23,559.95.
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From the 30-share blue-chip pack, the stock of ITC dipped over 2% after the diversified entity reported a 7.27% decline in consolidated net profit to ₹5,013.16 crore for the December quarter on account of subdued demand and sharp escalation in input costs.
State Bank of India, Adani Ports, Tata Consultancy Services, ICICI Bank, Reliance Industries and PowerGrid were also among the laggards.
“As the rate cut did not spring any major surprise, investors did not find anything interesting in the new RBI governor’s comments which resulted in a steady bout of profit-taking in banking, oil & gas, FMCG and power stocks. The ongoing earnings have been mixed to subdued while relentless selling of domestic shares by the FIIs have prompted investors to maintain caution,” Prashanth Tapse, Senior VP (Research), Mehta Equities Limited, said.
Among the gainers, Tata Steel jumped over 4%.
Bharti Airtel's stock surged nearly 4% after the firm reported a more than five-fold jump in consolidated net profit to ₹16,134.6 crore boosted by consolidation of the Indus Tower business and benefits of tariff hikes flowing into the quarter.
Zomato, Mahindra & Mahindra, UltraTech Cement and Tech Mahindra were also the other gainers.
Some stocks from interest rate sensitive realty and auto pack ended in the positive territory.
“A rate cut aimed at reviving the slowing economy is a positive indicator. However, yields edged higher as investors were disappointed by the absence of anticipated liquidity measures, leading to profit-booking in the indices. Additionally, a downward revision in the near-term growth forecast, influenced by global trade policies and inflation concerns, suggests that the central bank will adopt a cautious and gradual approach to future rate adjustments.
“While the broader market underperformed, the metals sector gained traction amid expectations of increase in demand,” Vinod Nair, Head of Research, Geojit Financial Services, said.
Home, auto and other loans are likely to see a drop in interest rates after the Reserve Bank of India under a new governor cut the key benchmark rate on Friday (February 7, 2025) for the first time in almost five years to spur a sluggish economy.
The Monetary Policy Committee, headed by RBI Governor Sanjay Malhotra, slashed the repo rate by 25 basis points to 6.25%. This was the first reduction since May 2020 and the first revision after two-and-a-half years.
Mr. Malhotra, a career bureaucrat who replaced Shaktikanta Das barely days after the last bi-monthly MPC meeting in December, forecast the Indian economy to grow at 6.7% in the fiscal year starting April 2025 while inflation rate to lower to 4.2%.
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For the fiscal year ending March 31, RBI quoted the government estimate to put the growth rate at 6.4%, its worst in four years and lower than 6.6% seen previously, while the inflation was pegged at 4.8%.
Repo rate also decides the returns on savings and investment products. A higher repo rate can lead to better returns on fixed deposits and other savings instruments, as banks offer higher interest rates to attract deposits. On the flip side, lower repo rates might reduce the interest earned on these savings products.
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In Asian markets, Seoul and Tokyo settled lower while Shanghai and Hong Kong ended in the positive territory.
European markets were trading mostly lower. U.S. markets ended mostly higher on Thursday (February 6, 2025).
Global oil benchmark Brent crude climbed 0.73% to $74.83 a barrel.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹3,549.95 crore on Thursday (February 6, 2025), according to exchange data.
On Thursday (February 6, 2025), the BSE bellwether gauge dropped 213.12 points or 0.27% to settle at 78,058.16. The Nifty declined 92.95 points or 0.39% to 23,603.35.
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