Stock markets rally as RBI cuts interest rate; Sensex jumps 447 points
Stock market benchmark indices Sensex and Nifty rallied on Friday (December 5, 2025) after the Reserve Bank of India (RBI) cut key benchmark interest rate for the first time in six months and took steps to boost liquidity to support a “goldilocks” economy in the face of high U.S. tariffs.
Rising for the second day in a row, the 30-share BSE Sensex advanced 447.05 points, or 0.52%, to settle at 85,712.37. During the day, it jumped 531.4 points, or 0.62%, to 85,796.72.
The 50-share NSE Nifty climbed 152.70 points, or 0.59%,, to 26,186.45.
On the weekly front, the BSE benchmark eked out a marginal gain of 5.7 points, while the Nifty dipped 16.5 points.
The six-member monetary policy committee, led by RBI Governor Sanjay Malhotra, voted unanimously to lower the repurchase or repo rate by 25 basis points to 5.25% and retained a neutral stance, which gives room for further rate cuts.
In doing so, the RBI seems to have shrugged off concerns over fall in the rupee, which breached 90 to a dollar this week.
The RBI lowered its inflation forecast for the fiscal year through March to 2% from 2.6%, while raising its GDP growth projection to 7.3%, from the previous estimate of 6.8 per cent.
From the Sensex firms, State Bank of India, Bajaj Finserv, Bajaj Finance, Maruti, HCL Tech, Larsen & Toubro, Mahindra & Mahindra and Infosys were among the major winners.
However, Hindustan Unilever, Eternal, Tata Motors Passenger Vehicles, and Sun Pharma were among the laggards.
Rate-sensitive stocks — bank, auto and realty — ended higher.
“Equity markets moved higher as investor sentiment received a major boost after the Reserve Bank of India (RBI) cut the repo rate by 25 bps and upwardly revised its FY26 GDP forecast to 7.3% from 6.8%, easing concerns over tariff-related pressure on domestic growth,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
The BSE midcap gauge climbed 0.21%, while smallcap index declined 0.67%.
Among sectoral indices, BSE Focused IT jumped 0.90%, bankex (0.86%), financial services (0.84%), metal (0.74%) and teck (0.73%).
However, BSE Services, capital goods, industrials and FMCG were the laggards.
“Indian markets have enthusiastically responded to the RBI’s unexpected 25 bps rate cut, a move that seemed unlikely given the strong Q2 GDP data. This surprise, combined with sharply lower inflation forecasts and supportive liquidity measures, has triggered a risk-on sentiment across equities. Rate-sensitive sectors such as autos, real estate, and NBFCs are leading the gains due to reduction in cost,” Vinod Nair, Head of Research, Geojit Investments Ltd, said.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹1,944.19 crore on Thursday, while Domestic Institutional Investors (DIIs) bought stocks worth ₹3,661.05 crore, according to exchange data.
In Asian markets, South Korea’s Kospi, Shanghai’s SSE Composite index and Hong Kong’s Hang Seng index settled in positive territory while Japan’s Nikkei 225 index ended lower.
Markets in Europe were trading higher. US markets ended on a flat note on Thursday.
Brent crude, the global oil benchmark, climbed 0.16% to $63.36 per barrel.
On Thursday, the Sensex edged higher by 158.51 points, or 0.19%, to settle at 85,265.32. The Nifty climbed 47.75 points, or 0.18%, to 26,033.75.
Published – December 05, 2025 05:13 pm IST
