A sharp rebound on Dalal Street on Friday sent the Sensex higher by 447 points to 85,712, after the Reserve Bank of India delivered a clear pro-growth message in its latest policy review. The Nifty ended 153 points up at 26,186.
The central bank’s unexpected 25-basis-point rate cut which is a move many thought unlikely after strong Q2 GDP data, set off a rally across rate-sensitive stocks. Banking counters led the upmove, with SBI and HDFC Bank accounting for a large share of the Sensex’s gains as investors priced in a boost to credit demand and lending margins.
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Rate cut sparks rally in banking, auto and real estate stocks
As per a Times of India report, Vinod Nair, head of research at Geojit Financial Services, said the policy caught the street by surprise and swiftly tilted sentiment in favour of equities. “The rate cut, along with sharply lower inflation projections and supportive liquidity measures, triggered a risk-on shift,” he said.
Auto, real estate and NBFC shares also firmed up as lower borrowing costs are expected to ease financing pressure for both companies and consumers.
The BSE Bankex rose 0.9%, with nine of its 10 constituents ending in the green. Yes Bank was the lone stock that closed lower.
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Analysts say the market now expects a period of consolidation with an upward bias. Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, said: “RBI’s stance, steady domestic flows, and growing expectations of a US Fed rate cut provide a strong backdrop for equities.”
With the central bank signalling comfort on inflation and placing its weight behind growth, traders believe the momentum could hold unless global cues turn sharply adverse.
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