Markets rally after RBI’s liquidity push; Sensex gains 746 points, Nifty ends above 25,000

Indian stock markets witnessed a strong rally on Friday after the Reserve Bank of India’s (RBI) policy announcement boosted investor sentiment. The central bank’s stance, seen as supportive of growth while maintaining inflation control, lifted market confidence. The BSE Sensex surged 746 points to close at 82,188 points, while the NSE Nifty 50 climbed 252 points to settle at 25,003, reclaiming the psychological 25,000-mark. Gains were broad-based, led by banking, auto, and FMCG stocks.

Both indices witnessed strong buying in early trade and held on to gains through the day, driven by renewed investor confidence amid signs of political stability and expectations of policy continuity.

"The Nifty opened on a flat note at 24,748 and dipped to an intraday low of 24,671. However, as the RBI governor began his policy address, the index staged a recovery and touched a high of 25,029. The session remained volatile, with banking stocks taking centre stage throughout the day,” read a report by Ashika Institutional Equity. 

Sector-wise, strong buying interest was seen in realty, financial services, banking, auto, and consumer durables, with most sectors ending in the green. 

"After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with limited space to support growth. Hence, the MPC also decided to change the stance from accommodative to neutral," the RBI said in the policy document.

Madan Sabnavis, chief economist, Bank of Baroda, said, "The RBI has surprised with a 50-bps cut in repo rate and a cut in CRR. However, significantly, it has been stated that the stance is changed to neutral, which also means that we may not expect rate cuts in the near future. Two points come to mind. First, the idea appears to be to frontload these cuts so that once demand for credit picks up, there would be more complete rate transmission. Second, given the inflation forecast for Q4 will be 4.4%, a repo rate of 5.5% would reflect a real rate of 1.1%, even though with the present inflation rate of around 3%, yields a higher real rate of 2.5% with repo at 5.5%."

"The bigger announcement has been the cut in CRR by 100 bps. This can obviate the need to have any OMOs as Rs 2.5 lakh crore will be released into the system in 4 tranches. Therefore, liquidity should be very comfortable throughout the year, which is a big positive for the market," said Sabnavis.