RBI Rate Cut Sparks Market Rally: Sensex Surges 738 Points, Nifty Reclaims 25,000

The benchmark S&P BSE Sensex surged 737.98 points or 0.90 per cent to settle at 82,188.99, while the Nifty 50 climbed 252.35 points or 1.01 per cent to close at 25,003.05.

In the week ending June 6, 2025, the Indian equity markets posted significant gains, bolstered by a surprise 50 basis points repo rate cut by the Reserve Bank of India (RBI) and a shift in its monetary policy stance from accommodative to neutral. Investor sentiment was uplifted by easing inflationary trends and strong Q4 FY25 GDP growth of 7.4 per cent, reflecting a stable macroeconomic environment. Broader markets outperformed, with the BSE Mid-Cap index rallying 2.12 per cent and the BSE Small-Cap index jumping 1.95 per cent, suggesting renewed optimism around domestic demand and easing credit costs.

The benchmark S&P BSE Sensex surged 737.98 points or 0.90 per cent to settle at 82,188.99, while the Nifty 50 climbed 252.35 points or 1.01 per cent to close at 25,003.05. The week began on a cautious note, with markets dipping on Monday following tariff hike concerns from the U.S. However, sentiment rebounded mid-week, driven by broad-based buying and positive global cues. The momentum intensified post-RBI’s policy announcement on Friday, pushing the indices to new highs.

The RBI’s Monetary Policy Committee (MPC) reduced the policy repo rate to 5.50 per cent in response to easing inflation and steady economic growth. The central bank now expects CPI inflation for FY26 to average 3.7 per cent, down from its earlier 4 per cent estimate. Real GDP growth for FY26 is projected at 6.5 per cent. The RBI emphasized a data-driven approach going forward, with the next MPC meeting scheduled from August 4 to 6, 2025.

Economic indicators painted a mixed picture. India’s Q4 FY25 GDP growth rose to 7.4 per cent, while the full-year growth stood at 6.5 per cent. The fiscal deficit for FY25 was in line with revised targets at 4.8 per cent of GDP. Manufacturing activity slowed slightly, with the HSBC Manufacturing PMI dipping to 57.6 in May, while the Services PMI improved marginally to 58.8.

In the auto sector, Mahindra & Mahindra posted a 17.33 per cent YoY sales growth, while Eicher Motors recorded a 26 per cent jump. In contrast, Tata Motors and TVS Motor Company reported declines of 1.07 per cent and 1.24 per cent, respectively. Hero MotoCorp saw a modest 1.92 per cent increase in dispatches, whereas Force Motors posted a strong 24.46 per cent jump in domestic sales.

Among stocks in the spotlight, Angel One rallied 6.13 per cent after reporting a 34.1 per cent rise in its client base. Servotech Renewable Power gained 26.86 per cent on securing a solar project order from Northeast Frontier Railway. AstraZeneca Pharma surged 22.53 per cent following robust Quarterly Results. Railtel Corporation soared 11.42 per cent after bagging a Rs 274.4 crore order. Garden Reach Shipbuilders & Engineers climbed 8 per cent on signing multiple MoUs with international partners, underlining its expanding global outreach in the shipbuilding sector.

Ashok Leyland rose 2.60 per cent after announcing a bus supply order worth Rs 183.80 crore from Tamil Nadu State Transport Corporation. Meanwhile, NMDC reduced ore prices effective June 4, and Larsen & Toubro’s stock eased 0.70 per cent despite bagging a significant order in Rajasthan.

Global markets delivered mixed signals. Eurozone inflation eased to 1.9 per cent in May, increasing expectations of a rate cut by the European Central Bank. U.S. economic indicators highlighted weaknesses, with the ISM Manufacturing PMI contracting for the third straight month and private sector job growth slowing to a two-year low. China's exports rose 8.1 per cent YoY, but manufacturing activity contracted again, as reflected in a drop in its PMI.

Despite global uncertainties and geopolitical tensions, Indian equities ended the week on a strong footing, supported by dovish monetary policy, better-than-expected economic data, and robust sectoral performance in mid-cap and Large-Cap segments.

Disclaimer: The article is for informational purposes only and not investment advice.