Sensex Falls 116 Points, Nifty Settles Below 23,400 After Volatile Session Despite RBI's Status Quo

The domestic equity market ended lower on Friday after a volatile trading session, as investors remained cautious despite capital gains tax relaxation for FPIs and the Reserve Bank of India (RBI) keeping the repo rate unchanged and maintaining its neutral policy stance.

The BSE Sensex closed at 74,243.34, down 116.67 points or 0.16 per cent. The NSE Nifty 50 settled at 23,366.70, losing 49.85 points or 0.21 per cent.

According to analysts, markets crumbled sharply as weak global cues pushed local investors to cut their exposure in banking, IT, auto and realty stocks. There is no clarity on peace talks between US & Iran, which has led to renewed uptick in global crude prices.

Markets had opened higher and extended gains after the RBI’s policy decision.

However, profit-booking in IT, metal and select heavyweight stocks erased the morning rally, dragging benchmarks into negative territory before a partial recovery in late trade.

RBI Policy Fails To Sustain Early Rally

The RBI’s Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.25 per cent while retaining its “neutral” stance. The central bank also announced measures aimed at improving foreign investor participation and easing tax-related frictions in the bond market.

While the policy was largely in line with expectations, investors remained concerned about slowing growth after the RBI revised its FY27 GDP growth forecast downward to 6.5 per cent from 6.9 per cent.

IT, Metal Stocks Weigh On Markets

Technology stocks remained under pressure throughout the session. The Nifty IT index ended down 0.99 per cent, with TCS falling 1.85 per cent, HCLTech declining 1.20 per cent and Tech Mahindra losing 0.39 per cent.

Metal shares were among the worst performers, with the Nifty Metal index falling 1.60 per cent. Tata Steel dropped 1.78 per cent, reflecting weakness across the commodity space amid global growth concerns. The Nifty Cement index declined 0.89 per cent, while Nifty Oil & Gas slipped 0.48 per cent.

Banking Stocks Outperform

Financial shares provided support to the market and helped limit losses. The Nifty Bank index rose 0.35 per cent to 54,496.25, while Nifty Financial Services ended 0.10 per cent higher. Nifty PSU Bank gained 0.48 per cent and Nifty Private Bank advanced 0.23 per cent.

Among major gainers, Hindustan Unilever surged 2.10 per cent, Axis Bank rose 1.86 per cent, Adani Ports gained 1.82 per cent and Bajaj Finance climbed 1.79 per cent.

Broader Markets Show Resilience

Compared with benchmark indices, broader markets were relatively resilient. The Nifty Smallcap 250 ended marginally higher by 0.01 per cent, while Nifty Smallcap 500 gained 0.02 per cent. However, Nifty Midcap 100 fell 0.35 per cent and Nifty Midcap 150 declined 0.29 per cent.

Among sectoral indices, Nifty Media was the standout performer, rallying 3.48 per cent. Healthcare and pharma stocks also attracted buying interest, with Nifty Healthcare gaining 0.56 per cent and Nifty Pharma rising 0.29 per cent.

Volatility Eases Slightly

The India VIX declined 0.61 per cent to 15.79, suggesting that investors did not anticipate a sharp increase in near-term market volatility despite ongoing global uncertainties.

What Analysts Said

Ponmudi R, CEO of Enrich Money, said the RBI’s measures to attract foreign capital and support the rupee were positive, but the unchanged repo rate and lower GDP growth projection limited the market’s ability to sustain gains.

According to him, investors continued to focus on global risks, particularly uncertainty surrounding developments in the Middle East, elevated energy prices and their potential impact on inflation and economic growth.

Ankur Punj, MD & Business Head at Equirus Wealth, said, “Markets crumbled sharply as weak global cues pushed local investors to cut their exposure in banking, IT, auto and realty stocks. There is no clarity on peace talks between US & Iran, which has led to renewed uptick in global crude prices. With rupee on the boil breaching the 94 per dollar mark and the continuing FII fund outflows from the domestic equities, there will be a lot of pessimism in the near term.”