Sensex, Nifty50 today: Will likely RBI rate cut spark a stock market rally or trigger caution?

The Indian equities market is expected to begin Friday’s session on a cautious and subdued note, with the benchmark indices--the Sensex and the Nifty50--likely to reflect a lack of clear direction amid mixed signals from global markets. Investors are also likely to remain on the sidelines in early trade as they await the outcome of the Reserve Bank of India’s (RBI) monetary policy announcement scheduled for today.

RBI Governor Sanjay Malhotra is set to unveil the central bank’s latest policy stance, with the Monetary Policy Committee (MPC) widely anticipated to deliver a repo rate cut. Analysts expect a reduction of 25 basis points (bps), which would bring the repo rate down from 6.00% to 5.75%. However, there is also some speculation that RBI could opt for a sharper cut of 50 bps, potentially lowering the rate to 5.50%, especially if the central bank chooses to signal a more aggressive push to support growth amid easing inflationary pressures.

On Thursday, the domestic market maintained its upward momentum, with both headline indices closing firmly in the green. The Nifty50 gained 131 points, while the BSE Sensex surged by 444 points, reflecting broad-based optimism. Sector-wise, the Capital Goods and Defence segments led the rally, each gaining over 2% as investor interest remained strong. However, some profit-taking was visible in selected public sector banks (PSBs) and media stocks during intraday trade, suggesting a degree of caution among traders, despite the positive close.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said, "The Nifty extended its winning streak to two days, buoyed by FII buying and hopes of a 25 bps repo rate cut in Friday's RBI policy. Sensex gained 444 pts to close at 81,442, while Bank Nifty rose 84 pts to 55,761."

Tapse added that the broader markets also joined the rally with Nifty Midcap 50 up 0.63% and Smallcap index up 0.96%. Realty stocks led the charge, with the Nifty Realty Index up 1.75%. "The India VIX eased over 4% to 15.08. Key Nifty gainers included Eternal (up 4.53%), Trent (3.15%), and Dr. Reddy's (3.05%), while IndusInd Bank (down 1.39%) and Tata Condumer (down 1.07%) were among the top losers. All eyes are now on RBI’s rate decision due on Friday at 10:00 a.m. with Nifty facing resistance at 25,000–25,117 and strong support at 24,500. The trend remains neutral," said Tapse.