The benchmark indices snapped their five-day winning streak as they closed marginally down on Friday after the Reserve Bank of India (RBI) held interest rates unchanged and cut the cash reserve ratio (CRR) by 50 basis points in line with expectations.
The indices rallied in the first four trading sessions this week, anticipating a cut in the CRR. For the week, Sensex and Nifty rose 2.4% and 2.3% respectively, marking their biggest weekly gain since June. This is also the third consecutive week of gains for the indices.
The Nifty and Sensex closed 0.1% lower at 24,677.80 points and 81,709.12 points, respectively. The caution ahead of the release of the US non-farm payroll data is also likely to have kept investors on the sidelines, experts said.
“The RBI’s decision to retain the repo rate at 6.5% was widely expected and reflects a prudent, balanced approach to managing growth while keeping inflation within the tolerable range… Markets had already anticipated the policy to be neutral, with a positive sentiment (already) being reflected,” Bajaj Broking said.
Deepak Ramaraju, senior fund manage at Shriram AMC, said: “The cut in the CRR was a welcome move and will lead to an improved credit growth due to increased liquidity in the system. Earnings are expected to pick up in Q4FY25 which will be supported by a pick-up in government spending.”
Despite the benchmark indices ending marginally lower on Friday, the broader market indices extended their gains. The BSE smallcap index rose 0.6% to register its 11th consecutive session of gains. The BSE midcap index rose for the sixth straight session by posting a 0.4% gain.
For the week, the midcap and smallcap indices jumped 3.5% and 3.4%, respectively. Among sectors, metals, real estate, consumer durables and PSBs were among major gainers.
The week saw consistent buying from foreign portfolio investors.
“Next week, we expect the Nifty to maintain its gradual upmove, driven by potential increase in liquidity post RBI’s CRR cut, positive news flows around government policies and return of FII inflows,” said Siddhartha Khemka, head – research, wealth management at Motilal Oswal Financial Services.
In its 2025 global outlook, Blackrock said, “We see some emerging markets like India well positioned to capitalise on mega forces and navigate US-China competition.” Blackrock said it is neutral on emerging markets. “The growth and earnings outlook is mixed. We see valuations for India and Taiwan looking high.”