The Indian stock market traded almost flat on Friday after the Reserve Bank of India (RBI) announced a 25 basis points (bps) cut in the repo rate. The BSE Sensex was trading down by 112 points or 0.14 per cent at 77,945 while the Nifty was at 23,585 with 18.30 points or 0.08 per cent lower during the intra-day trade.
Both the indices recorded little movement after gains in the metal stocks offset declines in ITC Ltd, Reliance Industries Ltd and a few banking and financial stocks.
Nifty Metal rose by over 2 percent after the Reserve Bank of India Governor said the manufacturing activity of the country stands at its highest.
This is the first rate cut that the central bank announced since May 2020. The committee was led by the new RBI governor, Sanjay Malhotra, who maintained the policy stance 'neutral.'
"The MPC observed that inflation has eased. Backed by a benign food outlook and ongoing transmission of previous monetary policy decisions, it is likely to remain softer in 2025-26 and eventually to track the target," said Sanjay Malhotra, RBI Governor.
India's GDP growth rate for the financial year 2025-26 has also been projected at 6.7% by the RBI.
It expects the economy to grow at 6.7 per cent in the first quarter, 7 per cent in the second quarter, and 6.5 per cent in the third and fourth quarters.
The central bank noted that the risks to growth are evenly balanced.
A 5 per cent depreciation in the rupee could push up CPI inflation by 0.26 percentage points, core inflation by 0.10 percentage points, and GDP growth by 0.20 percentage points, according to a report by Nomura.
"However, due to weak global demand and slow domestic consumption, the impact of currency fluctuations on inflation and exports may be limited this time," the report added.
Read also| Vijay Mallya Approaches Karnataka HC for Loan Recovery Details, Banks Issued Notice
Read also| Indian Stock Market Trades Flat Ahead of RBI MPC Meeting
