10 Apr 2025

Markets Remain Subdued Despite RBI’s Rate Cut and Positive Inflation Outlook

Indian equity markets remained weak in early afternoon trade despite the Reserve Bank of India’s Monetary Policy Committee (MPC) unanimously voting to cut the policy repo rate by 25 basis points—from 6.25% to 6.00%—to support economic growth. Investors seemed to shrug off the MPC’s decision and its lowered inflation projection for FY26 to 4%, down from 4.2%, citing a sharper decline in food prices and easing global crude oil rates.

Indices Overview
The BSE Sensex was trading at RS. 73893.21, down by 333.87 points or 0.45%, after moving between RS. 73673.06 and RS. 74103.83. Of the 30 stocks on the index, 10 were advancing while 20 were in decline.
The CNX Nifty stood at RS. 22424.80, down by 111.05 points or 0.49%, ranging between RS. 22353.25 and RS. 22468.70, with 17 stocks advancing and 33 declining.

Broader Market Performance
Both the broader indices were in the red. The BSE Midcap index slipped by 1.04%, while the Smallcap index was down 1.25%.

Sectoral Trends
Only a few sectoral indices posted gains:

  • FMCG up by 1.53%

  • Auto up by 0.57%

  • Consumer Durables up by 0.16%

Top losers included:

  • IT down by 2.20%

  • Realty down by 1.70%

  • Metal down by 1.65%

  • TECK down by 1.63%

  • Industrials down by 1.30%

Top Gainers and Losers
On the Sensex, top gainers were:

  • Nestle up by 3.53%

  • Hindustan Unilever up by 2.40%

  • Titan Company up by 1.88%

  • Power Grid up by 1.80%

  • Mahindra & Mahindra up by 1.59%

Top losers included:

  • Infosys down by 2.54%

  • Tech Mahindra down by 2.42%

  • Tata Steel down by 2.42%

  • Eternal down by 2.14%

  • SBI down by 1.95%

On the Nifty, leading gainers were:

  • Nestle up by 3.53%

  • Hero MotoCorp up by 2.60%

  • Hindustan Unilever up by 2.43%

  • Titan Company up by 1.91%

  • Power Grid up by 1.85%

Major Nifty losers included:

  • Wipro down by 4.37%

  • Trent down by 2.75%

  • Tata Steel down by 2.48%

  • Infosys down by 2.45%

  • Tech Mahindra down by 2.33%

Monetary Policy Update
Along with the rate cut, RBI also shifted its monetary stance from neutral to accommodative. The Standing Deposit Facility (SDF) rate now stands at 5.75%, while the Marginal Standing Facility (MSF) and Bank Rate are at 6.25%.

Consumer Price Index (CPI)-based inflation dropped significantly in early 2025, from 5.2% in December 2024 to 3.6% in February 2025. Food inflation touched a 21-month low of 3.8%, with fuel prices in continued deflation. However, core inflation edged up to 4.1% in February, largely due to rising gold prices.

Inflation and GDP Outlook
For FY26, CPI inflation is projected at 4.0% (Q1 at 3.6%, Q2 at 3.9%, Q3 at 3.8%, Q4 at 4.4%). GDP growth for 2024-25 is estimated at 6.5%, and the same is projected for FY26, with quarterly growth expected to remain steady between 6.3% and 6.7%.

Global Cues
Asian markets were largely in the red:

  • Nikkei 225 down by 4.09%

  • Taiwan Weighted lost 6.14%

  • Straits Times dropped 2.52%

  • Hang Seng, KOSPI, and Jakarta Composite also declined

  • Only Shanghai Composite posted gains, rising 0.86% to 3172.65

Despite positive domestic policy action, global headwinds and weak investor sentiment weighed on the Indian equity markets.