Sensex rallies over 400 points: Why is stock market rising today?
The stock market opened higher on Thursday, with Sensex and Nifty extending their gains from the last sesion. The rally was mainly driven by buying in pharma and healthcare stocks, along with support from positive global cues.As of 9:44 am, the S&P BSE Sensex had jumped 404.22 points to reach 81,402.47. The NSE Nifty50 was also up by 117.60 points at 24,749.PHARMA, HEALTHCARE LEAD THE GAINSMost sectors started the day in green. Nifty Pharma was the top performer, rising 1.05%, followed by Nifty Healthcare which gained 0.94%. The broader markets also joined the rally, with the Nifty Midcap 100 up by 0.34% and Nifty Smallcap rising 0.74%.Other sectors that saw gains included Nifty Oil & Gas (up 0.58%), Auto (up 0.47%), Metal (up 0.46%), Media (up 0.40%), IT (up 0.29%), Financial Services (up 0.26%), Realty (up 0.21%), Private Bank (up 0.19%), Consumer Durables (up 0.17%), and FMCG (up 0.10%).The only sector to open lower was Nifty PSU Bank, which slipped by 0.22%.The India VIX, which measures market volatility, dropped by 3.41%, indicating lower fear levels among traders and investors.POSITIVE GLOBAL CUES SUPPORT MARKET SENTIMENTIndian markets also tracked gains in other Asian markets. The MSCI Asia ex-Japan index rose 0.5%, led by Hong Kong and South Korean shares. South Korea's market hit an 11-month high following post-election optimism.Global support came from lower US Treasury yields and a weaker US dollar. These changes are usually positive for emerging markets like India as they attract foreign investors.INVESTOR SENTIMENT BOOSTED BY RATE CUT HOPESMarket mood was also lifted by growing hopes that the Reserve Bank of India (RBI) might cut interest rates during its ongoing Monetary Policy Committee (MPC) meeting, which started on June 4 and will end on June 6.Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said, 'Markets are showing strength with investors buying on every dip. Global cues and some easing in geopolitical tensions are helping the recovery. The fact that the market bounced back from around 23,600 levels on Nifty is a good sign. Ahead of the RBI policy decision, investors can watch banking and financial services stocks.'Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, said that most market watchers are expecting a 25 basis point cut in the repo rate.'Easing inflation could support this move, and if the cut happens, it would benefit sectors like banking, auto and real estate. Stocks like HDFC Bank, Kotak Bank, M&M, Eicher Motors and Lodha are some of the names that traders may watch closely," he added.Mishra also pointed out that the RBI's comments on future rate decisions will be important. Investors will look for signals on how the central bank views the economy, especially at a time when monsoon conditions seem good, but global trade still faces uncertainty.advertisement(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.)Must Watch
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Indian Express
an hour ago
- Indian Express
MPC's June meeting: In pursuit of growth
The June meeting of the RBI's Monetary Policy Committee contained many surprises. As against expectations of a 25 basis point cut in interest rates, the committee lowered the benchmark repo rate by 50 basis points. This brings the cumulative cuts since February to 100 basis points. The repo rate now stands at 5.5 per cent. The rationale for doing so seems straightforward. As RBI Governor Sanjay Malhotra said, 'It is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum.' And muted inflation provides the central bank the space to lower interest rates to do so. Inflation had edged lower to 3.16 per cent in April and is likely to stay subdued. A favourable monsoon bodes well for farm output and there are expectations of major commodities such as crude oil witnessing moderation. Forecasts by the RBI and most analysts do indicate softness in prices. As per the central bank's latest forecast, retail inflation, as measured by the consumer price index, is expected to average 3.7 per cent in 2025-26 (3.15 per cent in the first half of the year and 4.15 per cent in the second half). This is lower than its earlier estimate of 4 per cent. Alongside the rate cut, the RBI has also unexpectedly cut the cash reserve ratio by 100 basis points to boost liquidity. As per the central bank, this measure could release primary liquidity of Rs 2.5 lakh crore by December 2025. This will aid in policy transmission. However, at the same meeting, the RBI also unexpectedly announced a change in its policy stance from 'accommodative' to 'neutral', after having shifted it only in the last meeting. In the April policy meeting, the RBI Governor had said that the 'stance of monetary policy signals the intended direction of policy rates going forward'. This sudden decision is being viewed by some as signalling a pause in the rate cut cycle. In his comments, Malhotra did say that 'monetary policy is left with very limited space to support growth'. And though the central bank has retained its estimate of GDP growth for 2025-26 at 6.5 per cent, there does remain considerable uncertainty over the growth momentum. In fact, it has noted that 'spillovers emanating from protracted geopolitical tensions, and global trade and weather-related uncertainties, pose downside risks to growth'. Thus, taken together, the various announcements in the June meeting do suggest that the central bank will probably adopt a wait-and-watch approach over the coming months as it assesses the impact of the measures it has announced so far. Policy action in this period will depend on how the trajectory of growth and inflation evolves.
Hans India
an hour ago
- Hans India
RBI Goes For Steepest Interest Rate Cut In 5 Yrs: Home, auto loans get cheaper
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Hindustan Times
an hour ago
- Hindustan Times
RBI slashes policy rate by 50 bps to accelerate growth
Singles would have done the job, but the Reserve Bank of India decided to hit a six while chasing its monetary easing target . There are now various possible upsides to domestic growth. If the banks also expedite the transmission of interest rate cuts from RBI, mortgage payments could fall and cushion household budgets. This will add to the disposable income tailwinds from the upwards revision in income tax slabs, which have kicked in from April. A good monsoon is expected to boost rural incomes. That all this is happening in what is expected to be a benign inflationary environment – 2025-26's inflation forecast has been brought down from 4% to 3.7% -- only makes things better. The quarterly inflation projections beginning June 2024 are 2.9%, 3.4%, 3.9% and 4.4%. The policy rate in this case is the repo rate at which the RBI lends money to banks, making it the anchor of all other interest rates in the economy. CRR is the mandated share of deposits which banks have to keep in cash, either themselves or with the RBI. A reduction in CRR, therefore, frees more money for credit creation (roughly ₹2.5 lakh crore in this case). After Friday's decision, the MPC has already reduced the repo rate by a percentage point in this easing cycle of five months, taking it to the lowest level since August 2022 when it was 5.4%. The rationale for the aggressive action came from RBI governor Sanjay Malhotra . 'I must also add that while price stability is a necessary condition, it is not sufficient to ensure growth. A supportive policy environment is vital', he said in unambiguous terms in his post-MPC written statement. The message behind the action was best described by Madhavi Arora, lead economist at Emkay Global. ' RBI appears to have front-loaded all policy actions, be it higher-than-expected rate cuts or infusing durable albeit staggered liquidity via lower CRRs. All of that now implies that the ball is in the banks' court to transmit easier financial conditions faster,' she said. 'It is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum. This changed growth-inflation dynamics calls for not only continuing with the policy easing but also frontloading the rate cuts to support growth. Accordingly, the MPC voted to reduce the policy repo rate by 50 basis points to 5.50 per cent', the Governor said in his statement while adding that there would likely be no more rate cuts in the immediate future. 'After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth. Hence, the MPC also decided to change the stance from accommodative to neutral', governor Malhotra added. All of this raises the hope that the Indian economy could finally see its private investment cycle getting kick-started. Stock markets cheered this possibility, closing 0.9% higher than Thursday, making it the best inter-day gain since May 23. To be sure, RBI does not expect the economy to do better than its April projection of 6.5%. The quarterly growth projections now stand at 6.5%, 6.7%, 6.6% and 6.3% respectively. But Friday's measures could have compensated for persisting, and perhaps strengthening headwinds to economic growth from the ongoing international turbulence. That RBI's decision came a day after the public spat between US President Donald Trump and Elon Musk – the two have gone from being friends to enemies over Trump's fiscal plans – only underlines the volatility of the global economic environment, even as the government tries to work multiple trade deals including with the US to ensure or at least preserve gains from the export front. However, what RBI is underlining, more emphatically than it has done in the recent past, are the strong structural foundations of the Indian economy. Governor Malhotra spoke about a 5x3x3 matrix of fundamentals to highlight the relative advantage of the Indian economy vis-à-vis its peers. The matrix includes strong balance sheets in five sectors, corporates, banks, households, government and the external sector; stability on three fronts, price, financial and political; and investment opportunities through three Ds, demography, digitalisation and domestic demand. This matrix, the Governor said 'provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace'. To be sure, the Indian economy has struggled to find its private investment mojo despite larger macroeconomic stability even as dissipating pent-up demand after the pandemic and a peak in government capex has led to a loss of growth momentum. India's GDP growth came down from 9.2% in 2023-24 to 6.5% in 2024-25, showing a significant loss of growth momentum even though India continued to be the fastest growing major economy in the world and expected to become the world's fourth largest by the end of this fiscal year. 'We had been forecasting 75bp in rate cuts over the June, August and December meetings, of which 50bps has now been done. We forecast a pause in the August and October meetings, but hold on to our final rate cut call of 25bp in the December meeting, taking the repo rate to 5.25%,' said Pranjul Bhandari, chief India economist at HSBC. 'This is predicated on our view that growth in FY26 will be lower than RBI's 6.5% forecast,' she added.
