Sensex, Nifty end marginally higher after RBI pauses rates; auto, metal stocks shine

Sensex and Nifty closed marginally higher after the RBI kept rates unchanged. Rising crude prices and the new closing auction mechanism kept sentiment cautious and trade volatile.

In Short

• RBI keeps interest rates unchanged as expected
• Crude oil prices rise amid West Asia tensions
• Volatility eases; broader markets show resilience

Benchmark equity indices ended with modest gains on Wednesday after the Reserve Bank of India (RBI) kept interest rates unchanged as widely expected, although rising crude oil prices amid renewed geopolitical tensions capped the market's upside.

The BSE Sensex settled 152.05 points, or 0.19%, higher at 78,581.00, while the NSE Nifty50 edged up 9.75 points, or 0.04%, to close at 24,624.65.

The session was marked by heightened volatility. Markets opened on a strong note, tracking positive global cues and optimism ahead of the RBI's monetary policy decision. However, gains gradually fizzled out through the day after Governor Sanjay Malhotra flagged inflation risks arising from higher fuel prices while reiterating the central bank's commitment to keeping inflation under control.

Another factor that kept investors cautious was the rebound in crude oil prices. Brent crude climbed to around $80.7 a barrel after fresh Houthi attacks on a Saudi tanker clouded hopes of easing tensions in West Asia, reviving concerns over inflation and India's import bill.

Adding to the day's unusual trading pattern, the benchmark indices continued to reflect the impact of the newly introduced closing auction mechanism for futures and options (F&O) stocks. Before the closing session began at 3:15 pm, the Nifty was down about 0.18% while the Sensex was up 0.09%, before both benchmarks eventually settled in positive territory. Reuters reported, citing a source, that Sebi currently sees no structural or design flaws in the new auction system and has not set any timeline for a review.

Vinod Nair, Head of Research at Geojit Investments Limited, said the RBI policy broadly met market expectations but investors turned cautious as the session progressed due to rising oil prices.

"The RBI's MPC has maintained the status quo while marginally upgrading FY27 GDP growth projection, citing a resilient domestic economy. Additionally, annual inflation estimates were lowered, indicating the governor's open-minded approach, which suggested an optimistic view though further policy action would depend on data. Consequently, a rise in crude prices following renewed concerns over escalating tensions in West Asia led Indian markets, which had opened strongly, to gradually move lower during the course of the session," he said.

Nair added that select sectors continued to outperform despite the broader market remaining range-bound.

"Defying the broader market trend, realty and auto stocks outperformed on strong demand expectations ahead of the festive season and supportive financing conditions, while metal stocks gained on the back of an improved GDP growth outlook and robust domestic demand."

Among sectoral indices, Nifty Auto rose 1.27% to emerge as the top gainer, followed by Nifty Metal, which climbed 1.72%. Realty stocks also ended in the green, while financial services remained largely flat.

On the other hand, media, IT, FMCG and pharma stocks ended lower. Nifty IT slipped 0.16%, while Nifty Media fell 1.58%.

Among Sensex constituents, NTPC, SBI, Mahindra & Mahindra, IndiGo, Kotak Mahindra Bank, Trent and LT were among the top gainers. TCS, HCLTech, Reliance Industries, Sun Pharma, HDFC Bank and ITC ended among the key losers.

Broader markets remained resilient. The Nifty Midcap 100 edged up 0.18%, while the Nifty Smallcap 100 gained 0.76%, indicating continued buying interest beyond frontline stocks. India VIX declined 0.79%, signalling easing volatility.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

- Ends