Why stock markets fell after RBI kept key lending rates unchanged
Even though inflation is within the comfort band and growth remains robust, RBI signalled that it is not ready to shift toward a softer stance. Global uncertainties, from geopolitical tensions to commodity volatility, continue to influence the outlook.
The Reserve Bank of India (RBI) has kept interest rates unchanged and repeated its cautious, data-driven stance. This was exactly what the market expected, yet stocks still slipped.
The Sensex slipped over 350 points, while the Nifty50 was trading lower than 25,500 around 10:45 am. The decline is less about the policy itself and more about how investors interpreted the tone.
A few hours after the opening bell and the RBI MPC announcement, Tata Consultancy Services Ltd saw the sharpest fall, dropping 2.41%. Tech Mahindra Ltd declined 1.72%, State Bank of India Ltd slipped 1.60%, Adani Ports and Special Economic Zone Ltd fell 1.52%, and Infosys Ltd was down 1.40%.
ITC Ltd led the Sensex gainers, rising 3.42%. It was followed by Kotak Mahindra Bank Ltd, which gained 2.25%. Bharti Airtel Ltd moved up 1.65%, while Power Grid Corporation of India Ltd added 1.12%. Bajaj Finance Ltd was also higher, rising 0.64%.
Even though inflation is within the comfort band and growth remains robust, the central bank signalled that it is not ready to shift toward a softer stance.
Global uncertainties, from geopolitical tensions to commodity volatility, continue to influence the outlook. Traders were hoping for some hint that rate cuts could be considered later this year. Instead, the message was one of patience and vigilance, which cooled sentiment.
BALANCED BUT NOT IMMEDIATELY MARKET-FRIENDLY
Divam Sharma, Co-founder and Fund Manager at Green Portfolio PMS, says the stance is prudent given the global backdrop.
He points to India’s resilient domestic engine, supported by steady consumption, strong services activity and healthy credit growth. Inflation has edged up due to base effects but remains contained. In his view, the near-term direction for markets will depend on liquidity conditions and incoming inflation data.
Anil Rego, Founder and Fund Manager at Right Horizons PMS, notes that CPI remains well within the RBI’s 2-6% range, and WPI has only mildly firmed.
He highlights that GDP growth is projected at 7.4% for the year, with the RBI slightly upgrading its outlook for the first half of FY27. He sees stable policy as supportive for banks, housing, autos, consumer durables, capital goods and infrastructure-linked sectors.
GLOBAL SELLOFF ACROSS ASSETS DAMPENS SENTIMENT
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said that there is a risk-off sentiment in global markets.
"Bitcoin has crashed to below $64,000. Silver is down to $71 from the recent peak of 121. Even the safe-haven gold has turned weak despite huge uncertainty in global geopolitics. The tech-heavy Nasdaq has been steadily weakening and is now 6% down from its peak," he added.
After the RBI MPC announcement, broader markets were under pressure. Nifty Midcap 100 fell 0.73% and Nifty Smallcap 100 declined 0.93%, while India VIX eased 1.54%.
Most sectoral indices traded in the red.
Nifty Auto slipped 0.47%, Nifty Financial Services 25/50 fell 0.40%, Nifty IT dropped 2.11%, Nifty Media was down 0.32%, Nifty Metal declined 0.41%, Nifty Pharma fell 1.12%, Nifty PSU Bank slipped 1.32%, Nifty Realty declined 0.54%, Nifty Healthcare Index fell 1.19%, and Nifty Consumer Durables eased 0.39%.
A few sectors moved higher, with Nifty FMCG gaining 0.91%, Nifty Private Bank rising 0.29%, and Nifty Oil and Gas up 0.26%.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
The Reserve Bank of India (RBI) has kept interest rates unchanged and repeated its cautious, data-driven stance. This was exactly what the market expected, yet stocks still slipped.
The Sensex slipped over 350 points, while the Nifty50 was trading lower than 25,500 around 10:45 am. The decline is less about the policy itself and more about how investors interpreted the tone.
A few hours after the opening bell and the RBI MPC announcement, Tata Consultancy Services Ltd saw the sharpest fall, dropping 2.41%. Tech Mahindra Ltd declined 1.72%, State Bank of India Ltd slipped 1.60%, Adani Ports and Special Economic Zone Ltd fell 1.52%, and Infosys Ltd was down 1.40%.
ITC Ltd led the Sensex gainers, rising 3.42%. It was followed by Kotak Mahindra Bank Ltd, which gained 2.25%. Bharti Airtel Ltd moved up 1.65%, while Power Grid Corporation of India Ltd added 1.12%. Bajaj Finance Ltd was also higher, rising 0.64%.
Even though inflation is within the comfort band and growth remains robust, the central bank signalled that it is not ready to shift toward a softer stance.
Global uncertainties, from geopolitical tensions to commodity volatility, continue to influence the outlook. Traders were hoping for some hint that rate cuts could be considered later this year. Instead, the message was one of patience and vigilance, which cooled sentiment.
BALANCED BUT NOT IMMEDIATELY MARKET-FRIENDLY
Divam Sharma, Co-founder and Fund Manager at Green Portfolio PMS, says the stance is prudent given the global backdrop.
He points to India’s resilient domestic engine, supported by steady consumption, strong services activity and healthy credit growth. Inflation has edged up due to base effects but remains contained. In his view, the near-term direction for markets will depend on liquidity conditions and incoming inflation data.
Anil Rego, Founder and Fund Manager at Right Horizons PMS, notes that CPI remains well within the RBI’s 2-6% range, and WPI has only mildly firmed.
He highlights that GDP growth is projected at 7.4% for the year, with the RBI slightly upgrading its outlook for the first half of FY27. He sees stable policy as supportive for banks, housing, autos, consumer durables, capital goods and infrastructure-linked sectors.
GLOBAL SELLOFF ACROSS ASSETS DAMPENS SENTIMENT
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said that there is a risk-off sentiment in global markets.
"Bitcoin has crashed to below $64,000. Silver is down to $71 from the recent peak of 121. Even the safe-haven gold has turned weak despite huge uncertainty in global geopolitics. The tech-heavy Nasdaq has been steadily weakening and is now 6% down from its peak," he added.
After the RBI MPC announcement, broader markets were under pressure. Nifty Midcap 100 fell 0.73% and Nifty Smallcap 100 declined 0.93%, while India VIX eased 1.54%.
Most sectoral indices traded in the red.
Nifty Auto slipped 0.47%, Nifty Financial Services 25/50 fell 0.40%, Nifty IT dropped 2.11%, Nifty Media was down 0.32%, Nifty Metal declined 0.41%, Nifty Pharma fell 1.12%, Nifty PSU Bank slipped 1.32%, Nifty Realty declined 0.54%, Nifty Healthcare Index fell 1.19%, and Nifty Consumer Durables eased 0.39%.
A few sectors moved higher, with Nifty FMCG gaining 0.91%, Nifty Private Bank rising 0.29%, and Nifty Oil and Gas up 0.26%.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)