The Indian stock markets rallied strongly after the Reserve Bank of India (RBI) announced a surprise interest rate cut, marking the first reduction in six months. On Friday, December 5, 2025, the 30-share BSE Sensex surged by 447.05 points (0.52%) to close at 85,712.37. During intraday trading, Sensex even jumped 531.4 points (0.62%) to reach 85,796.72. Meanwhile, the 50-share NSE Nifty index climbed 152.7 points (0.59%) to settle at 26,186.45.
This positive momentum marked the second consecutive day of
gains for both benchmark indices, with investors responding favorably to RBI’s
monetary policy decision easing concerns over inflation and economic growth
outlook.
RBI Cuts Repo Rate to 5.25%, Signals More Rate Cuts Ahead
Led by RBI Governor Sanjay Malhotra, the six-member Monetary
Policy Committee unanimously voted to reduce the repurchase (repo) rate by 25
basis points to 5.25%. The RBI also maintained a neutral policy stance, keeping
room open for future rate cuts to support economic growth.
The central bank revised its inflation forecast downward to
2% for fiscal year 2025-26 from an earlier estimate of 2.6%, while raising its
GDP growth projection to 7.3% from 6.8%. These positive economic signals helped
restore investor confidence despite the rupee breaching the 90 mark against the
US dollar earlier this week.
Sectoral Performance: Banks, Auto, and Realty Lead Gains
Rate-sensitive sectors rallied strongly following the RBI’s
move. Key gainers in the Sensex included State Bank of India, Bajaj Finserv,
Bajaj Finance, Maruti Suzuki, HCL Technologies, Larsen & Toubro, Mahindra
& Mahindra, and Infosys. On the other hand, Hindustan Unilever, Eternal,
Tata Motors Passenger Vehicles, and Sun Pharma lagged.
The BSE bankex rose 0.86%, financial services by 0.84%,
metals by 0.74%, and IT (tech) sector by 0.73%. The midcap index edged up
0.21%, while the smallcap index declined 0.67%. FMCG, capital goods,
industrials, and services sectors were laggards on the day.
Vinod Nair, Head of Research at Geojit Investments, noted
that the rate cut surprised many but sparked a “risk-on” sentiment, boosting
sectors such as autos, real estate, and NBFCs due to lower borrowing costs.
Institutional Investors’ Activity and Global Market Trends
Foreign Institutional Investors (FIIs) sold Indian equities
worth ₹1,944.19 crore, whereas Domestic Institutional Investors (DIIs)
purchased shares worth ₹3,661.05 crore on Thursday, helping prop up the
markets.
Asian markets mostly closed higher, with South Korea’s
Kospi, Shanghai’s SSE Composite, and Hong Kong’s Hang Seng indices gaining
ground, while Japan’s Nikkei ended lower. European markets traded positively,
and US markets closed flat on Thursday.
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