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The Sensex & Nifty50 saw volatility as the RBI cut the repo rate to 6.25%
The Indian stock market witnessed significant movements on Friday, February 7, 2025, influenced by the Reserve Bank of India’s (RBI) monetary policy decision and sector-specific developments. While some stocks surged due to favorable economic outlooks, broader indices remained volatile as investors assessed the impact of the central bank’s policy stance.
RBI’s Monetary Policy Decision and Market Reaction
The RBI reduced the repo rate by 25 basis points, bringing it down to 6.25%. This marked the first rate cut in nearly five years, reflecting the central bank’s confidence in the economy’s ability to manage inflation while stimulating growth. The Monetary Policy Committee (MPC) maintained a neutral stance, allowing flexibility for further adjustments based on macroeconomic conditions.
RBI Governor Sanjay Malhotra stated that while growth is expected to recover, it remains below last year’s levels. The inflation outlook has improved, giving room for a policy easing cycle to support economic activity. The repo rate cut is expected to reduce borrowing costs, benefiting businesses and consumers.
Stock Market Indices Performance
After an initial surge following the RBI’s announcement, benchmark indices experienced mixed reactions throughout the trading session.
BSE Sensex traded at 77,854.16, down 204 points (0.26%) from the previous session.
Nifty50 declined to 23,531.15, falling 72 points (0.31%).
The volatility indicated that while investors welcomed the rate cut, some exercised caution due to global uncertainties and the need for further economic clarity.
Sectoral Trends and Performance
Rate-sensitive sectors, including financial services, real estate, and automobiles, gained traction as investors anticipated lower lending costs.
Nifty Auto and Nifty Realty indices saw moderate gains, driven by expectations of stronger consumer demand and improved affordability due to reduced interest rates.
Banking stocks experienced mixed reactions as investors evaluated how the rate cut would impact net interest margins and credit demand. Some private banks faced profit-booking, while public sector banks showed resilience.
On the other hand, export-oriented sectors such as IT and pharmaceuticals displayed a cautious outlook, as a softer monetary policy could affect currency fluctuations, impacting profit margins.
Top Gainers and Market Movers
Several stocks delivered impressive gains, driven by sector-specific developments and overall market sentiment.
Godfrey Phillips India Ltd. (Cigarettes)
Stock Price: ₹5,106.00
Gain: ₹506.55 (11.01%)
Godfrey Phillips emerged as one of the top gainers, benefiting from strong earnings results and robust demand in the tobacco sector. The company’s ability to sustain pricing power in a highly regulated industry contributed to investor confidence.
ZF Commercial Vehicle Control Systems India Ltd. (Auto Ancillaries – Others)
Stock Price: ₹11,746.15
Gain: ₹888.05 (8.18%)
The auto ancillary segment saw positive momentum, driven by growing demand for commercial vehicles and government policies favoring domestic manufacturing. Increased adoption of advanced safety systems in commercial vehicles further supported ZF’s stock price surge.
Bharti Hexacom Ltd. (Telecommunication – Equipment)
Stock Price: ₹1,396.00
Gain: ₹85.60 (6.53%)
Bharti Hexacom experienced a strong rally amid growing demand for 5G infrastructure deployment in India. The government’s focus on digital connectivity and rural expansion boosted investor sentiment.
JM Financial Ltd. (Finance – Investments)
Stock Price: ₹117.26
Gain: ₹6.86 (6.21%)
Financial services firms, particularly investment-focused companies, benefitted from the rate cut, which is expected to increase capital market activities and enhance liquidity conditions.
Bharti Airtel Ltd. (Telecommunications – Service)
Stock Price: ₹1,697.30
Gain: ₹77.55 (4.79%)
Bharti Airtel continued to attract investor interest due to strong subscriber growth and expanding 5G coverage. The telecom giant’s ARPU (Average Revenue Per User) growth contributed to its stock price appreciation.
Economic Indicators and Market Outlook
The RBI’s decision to lower interest rates is expected to stimulate economic activity, benefiting multiple sectors. The central bank’s real GDP growth projection for 2025-26 stands at 6.7%, with expectations of a gradual economic recovery.
Q1 GDP Growth Forecast: 6.7%
Q2 GDP Growth Forecast: 7.0%
Q3 & Q4 GDP Growth Forecast: 6.5% each
Inflation is likely to remain under control, supported by favorable food prices and the continued impact of previous monetary policy actions. The repo rate cut is also anticipated to improve credit demand, particularly in the housing and auto sectors.
Global Influences on the Indian Stock Market
Global market trends, including U.S. Federal Reserve policy, China’s economic slowdown, and commodity price fluctuations, continue to influence investor sentiment.
The U.S. Federal Reserve’s stance on interest rates will be a key driver for foreign institutional investors (FIIs).
China’s real estate and manufacturing slowdown may impact global demand, affecting Indian export-driven sectors.
Crude oil prices and geopolitical developments could contribute to market volatility in the coming months.
Despite these factors, the domestic market outlook remains positive, supported by strong corporate earnings, government infrastructure spending, and rising retail investor participation.
Investor Sentiment and Strategy
Market participants are adopting a balanced approach, weighing the positive impact of rate cuts against global economic risks.
Short-term traders are capitalizing on sectoral momentum, particularly in banking, real estate, and auto stocks.
Long-term investors are focusing on companies with strong earnings potential, particularly in sectors benefiting from policy tailwinds.
Institutional investors remain selective, closely monitoring global liquidity conditions and corporate performance metrics.
Key Takeaways from Today’s Market Session
The Sensex and Nifty50 experienced volatility, reacting to RBI’s rate cut decision.
Rate-sensitive sectors gained, with auto, real estate, and finance stocks seeing strong momentum.
Export-driven sectors such as IT and pharma remained stable, reflecting cautious investor sentiment.
Top gainers included Godfrey Phillips, ZF Commercial, and Bharti Hexacom, driven by sectoral growth trends.
The economic outlook remains positive, with RBI projecting 6.7% GDP growth for 2025-26.
Global market trends, U.S. interest rate decisions, and geopolitical factors continue to shape investor sentiment.
The Indian stock market’s performance on February 7, 2025, reflected the complex interplay between monetary policy changes and sector-specific trends. While the repo rate cut provided optimism, broader indices remained volatile as investors evaluated the long-term implications of RBI’s decision.
The coming weeks will be crucial, with market participants closely tracking corporate earnings, economic data, and global developments. While short-term volatility is expected, the long-term growth outlook remains strong, supported by robust economic fundamentals and policy measures aimed at sustaining momentum.