A surprise 25-basis-point repo rate cut by the Reserve Bank of India triggered a sharp rally in the Indian stock market, with the Sensex and Nifty closing significantly higher.
A surprise 25-basis-point repo rate cut by the Reserve Bank of India (RBI) set off a wave of optimism in the markets on Friday (December 5), helping both the Sensex and Nifty close sharply higher. The central bank's additional proposal to inject Rs 1.45 lakh crore liquidity through bond purchases and dollar-rupee swaps added further fuel to the rally, lifting investor confidence across sectors.
By the end of the day, the Sensex had jumped 447 points to 85,712.37, while the Nifty 50 climbed 153 points to touch 26,186.45. Despite mixed cues in the broader markets, the rally in large-cap and mid-cap counters helped push total market capitalisation on the BSE up by nearly Rs 1 lakh crore.
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RBI Rate Cut Triggers Wave of Optimism
The rate cut was unexpected because inflation is at record lows and economic growth remains strong. But the central bank surprised markets with a 25 bps reduction, alongside upgraded growth projections and softened inflation estimates.
"Markets have enthusiastically responded to the RBI's unexpected 25 bps rate cut," said Vinod Nair of Geojit Financial Services. "Lower inflation forecasts and supportive liquidity measures have triggered a risk-on sentiment."
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Top Gainers Shine as Financial Stocks Lead
With borrowing costs expected to fall, financial stocks led the rally. Among Nifty 50 stocks, 38 closed in the green.
Top Nifty gainers:
Shriram Finance: +3.04%
SBI: +2.49%
Bajaj Finserv: +2.13%
These gains were driven by expectations of improved credit demand and lower funding costs.
On the flip side, Hindustan Unilever (HUL) fell nearly 5% as its shares traded ex-ice cream business for the first time after the Kwality Wall's demerger.
Other laggards included:
Eternal: –1.35%
InterGlobe Aviation: –1.27%
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Banking, IT, and Auto Sectors Pick Up Pace
The rate cut immediately benefited rate-sensitive sectors:
Nifty Bank: +0.82%
Financial Services: +0.98%
PSU Bank Index: +1.51%
Private Bank Index: +0.49%
Nifty IT (+0.90%) and Auto (+0.74%) also posted solid gains, supported by improving liquidity and demand optimism.
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Heavyweights Like Vodafone Idea Dominate Volumes
High-volume counters included:
Vodafone Idea: 98.4 crore shares traded
Filatex Fashions: 28.62 crore
Easy Trip Planners: 13.56 crore
Vodafone Idea remained the busiest, reflecting strong retail interest.
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Small Stocks See Big Action: 7 Jump Over 15%
Companies like Kesoram Industries, Keynote Financial Services and Rollatainers were among seven stocks that surged over 15%, showcasing momentum in select mid- and small-cap pockets despite broader weakness.
Mixed Market Breadth as More Stocks Decline
Of the 4,328 stocks traded on the BSE:
1,805 rose
2,342 fell
181 remained unchanged
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Over 90 Stocks Hit Fresh 52-Week Highs
As many as 91 stocks scaled new 52-week highs, including:
Hero MotoCorp, Aditya Birla Capital, Nalco and Hindustan Copper, signalling strength in autos, metals and financials.
But more than 300 stocks hit 52-week lows, showing lingering pressure in parts of the market.
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Nifty May Face Resistance Ahead, Say Analysts
Technical analysts see 26,300–26,350 as a major hurdle for the Nifty. A breakout above this zone could push the index to 26,500 or even 26,700.
