Equity benchmarks closed Friday’s session with notable gains, buoyed by the Reserve Bank of India’s decision to cut the repo rate by 25 basis points to 5.25%. The Sensex finished at 85,712.37, an increase of 447.05 points or 0.52%, while the Nifty rose by 152.70 points or 0.59% to settle at 26,186.45.
This unanimous decision by the RBI marked a total of 125 basis points in cuts since February 2025, influenced by a record low retail inflation rate of 0.25% recorded in October. The central bank also announced ₹1 lakh crore in open market operations for government securities and a three-year dollar-rupee buy-sell swap of 5 billion USD to enhance liquidity in the market.
“Today, the Indian equity markets exhibited strong resilience as the anticipated 25 basis points repo rate cut, announced at the conclusion of its MPC meeting, bolstered investor confidence and led to broad-based gains across rate-sensitive sectors,” commented Abhinav Tiwari, Research Analyst at Bonanza.
The banking and financial services sectors were significant contributors to this rise, with the Nifty Bank index increasing by 488.50 points or 0.82% to 59,777.20. The Nifty Financial Services index surged by 270.45 points or 0.98% to reach 27,881.90. Notable gainers included Shriram Finance, which jumped 3.04% to ₹853.35, and State Bank of India, which rose by 2.49% to ₹971.70. Bajaj Finserv added 2.13% to close at ₹2,092.90, while Adani Enterprises and Maruti Suzuki saw increases of 2.03% to ₹2,263.00 and 1.91% to ₹16,300.00, respectively.
The broader market showed mixed results, with the Nifty Midcap 100 index gaining 294.80 points or 0.49% to 60,594.60, while the Nifty Smallcap 100 declined by 100.10 points or 0.57% to 17,507.75. Market breadth remained negative for the sixth consecutive session, with 2,423 stocks declining compared to 1,740 advancing on the BSE, where 4,328 stocks were traded overall. The exchange noted 91 stocks reaching 52-week highs and 304 touching 52-week lows.
“In the past week, benchmark indices exhibited volatile activity,” said Amol Athawale, Vice President of Technical Research at Kotak Securities. “The Nifty ended 0.08% lower and the Sensex dropped by 5 points. The IT index outperformed with a rally of 3.30%, while the Nifty Tourism index experienced the largest decline, dropping 3.40%.”
In stock-specific developments, Kaynes Technologies experienced a steep drop of 12% amid reports of potential governance issues. IndiGo shares fell by 1.2% even after the DGCA provided temporary regulatory relief, as the airline faced significant operational disruptions, including nearly 500 flight cancellations on December 5 alone.
The rupee traded slightly weaker, down by 0.08 paise at 89.92 against the dollar, amidst ongoing pressure from foreign institutional investor selling. “While the RBI’s 25 bps rate cut may provide some stability to financial sectors, concerns about delays in the India–US trade deal and rising bullion and metal prices continue to affect sentiment,” noted Jateen Trivedi, Vice President of Research at LKP Securities. He added that the rupee is expected to fluctuate within a range of 89.75 to 90.25.
In the commodities market, spot gold remained above $4,220 per ounce as investors exercised caution ahead of critical US inflation data. “Current market conditions indicate an 87% probability of a 25-basis-point Fed rate cut next week,” stated Kaynat Chainwala, Assistant Vice President of Commodity Research at Kotak Securities. Meanwhile, WTI crude prices held steady around $59.70 per barrel amid ongoing geopolitical tensions related to the Russia-Ukraine conflict.
Looking ahead, markets are set to monitor upcoming December-quarter results and developments regarding the US Federal Reserve’s policy direction. “Immediate resistance is observed around 26,300, followed by 26,500, while support levels are expected between 25,950 and 26,000 in the near term,” commented Nandish Shah, Deputy Vice President at HDFC Securities.
