Stock market today: Sensex, Nifty lose ground as investors book profits sparked by RBI’s shift in policy stance

The Indian stock market resumed its downward trajectory, after a one-day hiatus, on Wednesday, October 9 as investors succumbed to profit-taking during the fag end of the session.

The benchmark indices began the session on a positive note and gained momentum after the RBI set the stage for possible rate cuts in the upcoming meetings. However, the momentum fizzled out amid selling in heavyweights like Reliance Industries, HDFC Bank, and ITC.

Consequently, the Nifty 50 closed the session with a drop of 0.12%, finishing below the 25,000 mark at 24,981. Similarly, the Sensex wrapped up the day with a 0.21% drop, settling at 81,465.

Barring Tuesday, the benchmark indices have ended in the red in seven out of the last eight trading sessions.

Out of the 50 constituents in the Nifty index, 27 closed in the positive territory, with Cipla leading the way, rising 2.4%. Other notable performers included Trent, Tata Motors, State Bank of India, Maruti Suzuki, Tech Mahindra, Shriram Finance, Bajaj Finance, Bajaj Finserv and Axis Bank, all of which finished today's session with gains exceeding 1.5%.

As large-cap stocks faced profit booking at higher levels, mid and small-cap stocks continued to gain ground for the second consecutive trading session. The Nifty Midcap 100 index closed with a gain of 1%, finishing at 59,107, while the Nifty Smallcap 100 index rose by 1.33% to end at 18,864.

RITES was the top performer in the small-cap index, surging 8.2%, followed closely by CDSL, which rallied 8.1%. Other notable gainers included Radico Khaitan, Affle (India), Action Construction, Blue Star, Apar Industries, and Welspun Living, all of which finished the session with gains exceeding 5%.

The overall market capitalisation of the firms listed on the BSE rose to nearly ₹462.2 lakh crore from ₹459.5 lakh crore in the previous session, making investors richer by about ₹2.7 lakh crore in a single session.

Now, with the RBI policy out of the way, investor focus will shift towards the upcoming earnings season, set to kick off tomorrow, with IT giant TCS slated to unveil its results.

RBI holds rates, shifts stance to 'neutral'

The Reserve Bank of India (RBI) maintained the repo rate at 6.5% for the tenth consecutive policy meeting. However, the Monetary Policy Committee (MPC) signalled a shift in its stance from "withdrawal of accommodation" to "neutral," paving the way for potential rate cuts in the future.

This decision comes amid early indications of slowing economic growth. Major central banks globally have embarked on a cycle of easing due to declining inflation, including the US Federal Reserve, which reduced rates last month for the first time in over four years.

Additionally, the RBI maintained its growth forecast for the current fiscal year at 7.2%, supported by strong consumption and investment trends. However, it has revised the GDP estimate for the second quarter down to 7% from a previous projection of 7.2%. Real GDP growth for Q1 of 2024-25 was also adjusted to 6.7% compared to the earlier estimate of 7.1%.

Furthermore, the RBI raised its growth forecasts for the third and fourth quarters from 7.3% and 7.2%, respectively, to 7.4%.

Experts view on today's market activity

Commenting on today's market performance, Prashanth Tapse, Senior VP (Research), Mehta Equities, said, "Markets lost ground in the second half and slipped into the red on selective profit-taking as investors resorted to caution in the run-up to the start of the second quarter earnings season. For markets to perform well going ahead, strong conviction is required, and earnings season will be the key thing to look out for over the next few weeks."

Vinod Nair, Head of Research, Geojit Financial Services, said, “An upward revision in Q3FY25 inflation reiterates that the sticky inflation continues to remain a concern for the RBI and led investors to book profit towards the close. The volatility in input prices and the impact on margin dragged the FMCG stocks.”

"The change in RBI's stance to neutral was favourable and expected, but the commentary is not pointing to a rate cut in the near term. Meanwhile, the investor’s sentiment is buoyed on the broad market taking opportunity on a stock-to-stock basis, to capitalise from the recent correction," he further added.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.