Sensex, Nifty lose initial gains, close in red post RBI's status quo on rates

The Sensex closed 167.71 points down, at 81,467.10, while the Nifty50 dropped 31.20 points, settling at 24,981.95.

Out of the Nifty companies, 31 showed advances and 19 recorded declines. Notable gainers included Cipla, Trent, Tata Motors, SBI, and Tech Mahindra, which helped the index from a steeper fall. On the downside, ITC, Nestle India, ONGC, Reliance, and Hindustan Unilever were the top losers, dragging the markets down.

The market pullback followed a key announcement from the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), which decided to maintain the repo rate at 6.5 per cent for the tenth consecutive meeting.

The MPC also shifted its stance from 'withdrawal of accommodation' to a neutral position, signaling a more cautious approach to future monetary policy decisions.

This shift comes in response to global trends, particularly the US Federal Reserve's recent 50 basis point rate cut, reflecting a broader move towards monetary easing.

Analysts suggest that this transition could pave the way for potential rate cuts by the RBI in upcoming meetings, with expectations building for a possible reduction as early as December.

The RBI's focus remains on managing liquidity and balancing inflationary pressures, especially in light of rising food and metal prices.

Despite these challenges, the central bank has maintained its GDP growth projection for FY25 at 7.2 per cent, highlighting India's resilience and growth potential.

However, geopolitical tensions in the Middle East pose risks, particularly to sectors like gems and jewellery, where trade could be disrupted until the situation stabilizes.

Vinod Nair, Head of Research, Geojit Financial Services, said an upward revision in Q3FY25 inflation reiterates that the sticky inflation continues to remain a concern for the RBI and led investors to book profit towards the close.

"The volatility in input prices and the impact on margin dragged the FMCG stocks. The change in RBI's stance to neutral was favourable and expected, but the commentary is not pointing for a rate cut in the near term. Meanwhile, the investor's sentiment is buoyed on the broad market taking opportunity on a stock-to-stock basis, to capitalise from the recent correction," he said.

Investors will be closely monitoring upcoming developments, both domestically and globally, as markets react to central bank policies and geopolitical events. (ANI)