Rate Cut Sparks a Sunrise Rally: India’s Markets Shake Off the Fog and March Ahead

For weeks, domestic equities had been moving through an uneasy stretch, weighed down by uneven global cues and pockets of selling. That tension finally eased after the Reserve Bank of India announced a repo rate reduction, a move that immediately breathed life back into rate-linked sectors and lifted benchmark indices beyond key psychological milestones.

The Nifty 50 ended the session with a 0.59 percent rise, reclaiming territory above 26,000 and settling at 26,188. The Sensex followed a similar trajectory, climbing 0.54 percent to close at 85,723. Gains in the broader market were less uniform. The Nifty Midcap 100 edged higher by 0.53 percent, while the Nifty Smallcap 100 slipped 0.54 percent, reflecting a cautious undertone among smaller companies.

Most major sectors finished in positive territory, anchored by a strong rebound in PSU banks, which advanced 1.55 percent. Technology, metals and auto counters also strengthened, posting increases ranging from 0.66 percent to around 1 percent. Realty and chemicals registered modest but steady progress, adding 0.38 percent and 0.20 percent.

The RBI’s decision to reduce the repo rate by 25 basis points to 5.25 percent marked its first rate cut in half a year. The central bank also signaled that more easing could follow if inflation continues to behave and growth stays firm. The move came at a time when analysts were divided. Some believed the RBI would pause, pointing to the significant cumulative cuts already delivered this year and the pickup in economic activity during the July–September quarter. Others argued that subdued price pressures and the mounting drag on India’s external sector created a compelling case for further support.

India’s currency has been under strain, weakening nearly five percent against the US dollar this year, the sharpest decline among major Asian peers. A large part of this stress stems from the steep 50 percent import tariffs imposed by US President Donald Trump, which have hit India’s export momentum and injected fresh uncertainty into trade flows.

Financial stocks became the day’s clear leaders. Lending institutions and non-bank finance companies rallied strongly, with names such as Mahindra & Mahindra Financial Services, Sundaram Finance, Shriram Finance, Cholamandalam Investment & Finance, Muthoot Finance, L&T Finance, Aditya Birla Capital, RBL Bank, Manappuram Finance, PNB Housing Finance, State Bank of India and Bajaj Finserv recording gains spanning 2.4 percent to 6 percent.

After facing intense selling pressure recently, Patanjali Foods staged a notable recovery, adding 4 percent to reach ₹547.80. PTC Industries advanced by a similar margin after its subsidiary, Aerolloy Technologies, secured a long-term supply partnership with Honeywell Aerospace Technologies. Himadri Speciality extended its winning streak to a third session with another 2 percent rise, while Wockhardt resumed its upward run, closing 2 percent higher at ₹1,360.

The Multi Commodity Exchange also bounced back meaningfully, climbing 2.2 percent to ₹10,343. Automobile stocks, widely seen as beneficiaries of lower borrowing costs, finished the day with firm gains across the board.