Equity markets initially reacted with enthusiasm on June 5 after the Reserve Bank of India (RBI) kept the repo rate unchanged at 5.25 per cent and retained its neutral policy stance, in line with market expectations. However, sentiment quickly reversed, and within a short span, sharp selling pressure emerged, leading to a volatile session as stocks swung between gains and losses.
At 12:05 PM, the BSE Sensex traded about 105 points, or 0.14 per cent, higher at 74,465 level, while the NSE Nifty 50 quoted up by about 20 points, or 0.08 per cent, around 23,430 level.
The broader markets, relatively, were higher, as the Nifty Midcap 100 and Nifty Smallcap 100 were trading up in the range 0.30-0.40 per cent.
Of the 3,213 stocks traded on the NSE so far, more stocks were in the green than in the red. About 1,852 stocks gained, while 1,266 fell and 95 stayed unchanged.
About 86 stocks hit their 52-week highs, while 27 touched their 52-week lows and 84 stocks hit their upper circuit, while 68 were locked in lower circuits.
All six members of the Monetary Policy Committee (MPC) voted unanimously to keep the rate unchanged, signalling policy continuity. The decision to maintain status quo comes as central bank continues to weigh inflation risks against concerns of slowing growth and persistent pressure on the rupee.
The MPC said the global situation has become weaker, with rising geopolitical tensions, supply chain issues and higher market volatility. However, it noted that India is still in a strong position to deal with these external shocks.
“We remain confident to withstand these shocks with minimum pain,” Governor Malhotra said, adding that these challenges should also be used as an opportunity to make the economy stronger.
He also said the Indian economy is starting this phase of global uncertainty from a better position compared to earlier periods of stress.
On the external environment, Malhotra said conditions have “deteriorated,” citing continued tensions in West Asia despite a fragile truce, higher energy prices, and continued disruptions in supply chains. He added, “The global economic outlook remains clouded,” highlighting that uncertainty around global growth continues to persist.
RBI Sees Slower Growth Ahead Amid Oil And Geopolitical Risks
The RBI cut its real gross domestic product (GDP) growth forecast for FY27 to 6.6 per cent from an earlier estimate of 6.9 per cent, citing global risks such as the Iran conflict, higher oil prices and ongoing geopolitical tensions that could weigh on economic activity.
For the year, the central bank now expects quarterly growth at 6.6 per cent in the first quarter, 6.3 per cent in the second quarter, 6.5 per cent in the third quarter and 6.8 per cent in the fourth quarter.
On inflation, the RBI flagged continued global uncertainty, indicating that price pressures could remain sensitive to external shocks such as energy costs and supply disruptions, even as domestic conditions stay relatively stable.
Rate Sensitive Stocks Gain
Rate-sensitive sectors, including banking, financial services, real estate and automobiles, advanced following the RBI MPC's decision, as investors factored in continued stability in borrowing costs and sustained credit demand.
Nifty Realty and Nifty PSU Bank led the gains, rising as much as 1.70 per cent, supported by expectations that stable interest rates will aid housing demand and sustain lending growth. Nifty Financial Services climbed up to 1.30 per cent, while Nifty Auto gained as much as 0.80 per cent, supported by the prospect of steady financing conditions for vehicle purchases.
Nifty Private Bank, however, saw relatively muted gains, capped under 0.50 per cent, reflecting selective participation within the financial pack.
