Benchmark stock indices recovered from their earlier dip following a reduced mandate for the BJP-led NDA during the Lok Sabha election results. On Friday, the Sensex reached a record high.
The S&P BSE Sensex jumped by over 1,600 points, hitting a historic 76,795.31. Similarly, the NSE Nifty50 rose by 2.07% to 23,294.2.
This stock market surge was driven by the RBI’s updated GDP growth forecast for FY25, which increased to 7.2% from the previous 7%. Additionally, the RBI kept interest rates steady at 6.5% for the eighth consecutive time.
Sensex Hit New Highs as RBI Holds Interest Rates Steady
Indian benchmark indices closed higher for the third consecutive session on Friday. The BSE Sensex, comprising 30 stocks, reached a new all-time high following RBI Governor Shaktikanta Das’ announcement that the RBI MPC has kept interest rates at 6.5% for the eighth time in a row. Das also updated the GDP growth forecast for FY25 to 7.2%.
Prashant Pimple, CIO-Fixed Income at Baroda BNP Paribas Mutual Fund, commented on the MPC decision: “The growth-inflation balance is moving favorably, with GDP growth projected at 7.2% for FY25 and inflation at 4.5%. Lower interest rates are boosting GDP growth.”
The Sensex opened lower at 75,031.79 but surged in the afternoon to an intraday high of 76,795.31. It closed at 76,693.36, up 1,618.85 points or 2.16%. Similarly, the Nifty opened flat at 22,821.85, peaked at 23,320.20, and closed at 23,290.15, gaining 468.75 points or 2.05%.
Vinod Nair, Head of Research at Geojit Financial Services, noted, “The market rallied broadly due to the anticipated stability within the coalition government and the RBI’s upward revision of its FY25 growth forecast to 7.2%. The Indian market reached a fresh peak, surpassing its previous record set on exit-poll day. Although inflation targets remain challenging, investors expect the MPC to move closer to easing rates.”
All 30 stocks in the BSE Sensex ended in the green, with Mahindra & Mahindra, Wipro, Tech Mahindra, Infosys, and Tata Steel as top gainers. In the Nifty 50, only SBI Life and Tata Consumer Products closed in the red, while Mahindra & Mahindra, Wipro, Tech Mahindra, Infosys, and Tata Steel led the gains.
The broader market also performed well, with the BSE SmallCap up 2.18% and the BSE MidCap rising 1.28%. All sectoral indices closed higher, led by the IT index (up 3.37%), followed by Auto, Oil & Gas, Metal, and Realty indices, each up more than 2%.
Pimple from Baroda BNP Paribas Mutual Fund added, “The market now looks forward to the budget and the government’s fiscal consolidation plans. We expect strong macro fundamentals, with the government maintaining a fiscal deficit to GDP ratio of 5.1%.”
Also Read: Nifty 50 and Sensex Reach Record Highs, 4 Reasons Driving Market Surge
RBI Holds Interest Rates
Stocks in interest rate-sensitive sectors like banking, finance, automotive, and real estate soared up to 8% after the RBI announced it would keep interest rates unchanged.
The total market capitalization of all BSE-listed companies grew by Rs 7.68 lakh crore, reaching Rs 423.57 lakh crore.
IT and bank stocks were the main focus, with the tech sector leading the gains.
Wipro surged over 5%, Infosys increased by 3%, and Tech Mahindra, TCS, and HCL Tech each gained between 2-3%.
Other notable gainers in the Sensex included Bajaj Finance, Ultratech Cement, and Tata Steel. Reliance significantly contributed to the rally, adding 192 points to the Sensex.
In the real estate sector, shares jumped up to 8% following the RBI’s decision. Sunteck Realty and Soba both rose by 8%, while Brigade, Lodha, and Mahindra Lifespace saw gains between 2-5%.
Nifty Bank and Auto Stocks See Strong Gains
Nifty Bank stocks made notable gains, climbing up to 3%. Banks like Bandhan Bank, Federal Bank, AU Small Finance Bank, Axis Bank, ICICI Bank, and Bank of Baroda each saw their shares increase by 1-3%.
Similarly, shares of Bajaj Finance, SBI Card, Bajaj Finserv, and IDFC rose between 1-3.5%.
Nifty Auto stocks also went up by as much as 2.5%, with Mahindra and Mahindra rising significantly by 5.38%.
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Frequently Asked Questions (FAQs)
Q.1. Why did the Sensex and Nifty reach record highs?
Ans. The Sensex and Nifty reached record highs due to the RBI’s decision to keep interest rates steady and its revised GDP growth forecast for FY25.
Q.2. What was the RBI’s new GDP growth forecast for FY25?
Ans. The RBI updated its GDP growth forecast for FY25 to 7.2%, up from the previous 7%.
Q.3. Which sectors saw the most significant gains following the RBI’s announcement?
Ans. The IT, banking, finance, automotive, and real estate sectors saw the most significant gains, with some stocks surging up to 8%.
Q.4. How did individual stocks like Mahindra & Mahindra and Wipro perform?
Ans. Mahindra & Mahindra rose by 5.38%, while Wipro surged over 5%. Other notable gainers included Infosys, Tech Mahindra, and Tata Steel.
Q.5. What was the impact on the broader market and sectoral indices?
Ans. The broader market performed well, with the BSE SmallCap up 2.18% and the BSE MidCap rising 1.28%. All sectoral indices closed higher, led by the IT index.
