Indian equity markets staged a decisive comeback on Friday, shaking off early sluggishness to end the week on a high note. The benchmark indices rallied after the Reserve Bank of India (RBI) delivered an unexpected 25 basis point cut to the policy rate, a move that immediately ignited buying interest in interest-rate-sensitive sectors.
The S&P BSE Sensex climbed 447 points, or 0.52%, closing at a robust 85,712.37. Similarly, the NSE Nifty 50 advanced by 153 points, or 0.59%, to finish the session at 26,186.45.
Surprise Move Fuels “Risk-On” Sentiment
The central bank’s decision caught the street off guard. Given the recent strong Q2 GDP data, many analysts had anticipated a pause. However, the RBI’s move to lower borrowing costs, coupled with revised lower inflation forecasts and measures to support liquidity, has significantly boosted investor confidence.
Vinod Nair, Head of Research at Geojit Financial Services, noted that the cut triggered immediate “risk-on” sentiment across equities.
“Rate-sensitive sectors such as autos, real estate, and NBFCs are leading the gains due to lower borrowing costs,” Nair observed. He added that while private banks gained on the prospect of treasury profits, the upside was somewhat constrained by lingering concerns over net interest margins (NIMs).
Looking ahead, Nair remains cautiously positive, citing December’s corporate earnings as the next major trigger. However, he warned that global trade tensions, a widening current account deficit, and the U.S. Federal Reserve’s upcoming decisions on rates remain critical factors for the domestic trend.
Technical Outlook: Bulls in Control
Technical indicators suggest that the market’s momentum may sustain in the near term. According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty’s sharp move has pushed it above the critical 21-day Exponential Moving Average (EMA).
“On the hourly chart, the index has given a breakout from its recent consolidation, indicating rising optimism,” De said. He pointed out that the Relative Strength Index (RSI) has reclaimed a bullish crossover, signaling strong momentum. De projects a potential upside towards the 26,300–26,440 zone, with strong support placed between 26,000 and 26,060.
Global Cues and Sectoral Action
The domestic rally was supported by a generally positive global backdrop. U.S. stocks edged higher on Friday, with the Dow Jones adding over 100 points and the Nasdaq advancing 0.31%, fueled by elevated expectations of a Federal Reserve rate cut next week. European markets, while largely flat, managed to cap the week with modest gains as investors digested long-awaited U.S. inflation data.
Back home, trading desks saw intense activity in specific counters.
- Top Value Traded: Kaynes Technology led the pack with a turnover of Rs 3,869 crore, followed by InterGlobe Aviation, TCS, Infosys, SBI, Reliance Industries, and Hindustan Copper.
- Volume Buzz: Vodafone Idea remained the most actively traded stock by volume, with over 98 crore shares changing hands. Other volume toppers included YES Bank, Suzlon Energy, and Ola Electric Mobility.
Broader market participation was evident with strong buying interest seen in stocks like M&M Financial, Rashtriya Chemicals, Patanjali Foods, and Indus Towers.
Disclaimer: The views and investment tips expressed by experts in this report are their own and not those of Capital Mirror or its management. Capital Mirror advises users to check with certified experts before taking any investment decisions.
