Mumbai: Benchmark indices Sensex and Nifty ended lower Friday amid profit-taking after the RBI lowered its growth expectations for the current fiscal year and forecast inflation to rise to 5.1 per cent.
Also adding to the bearish trend in equities were foreign fund outflows, geopolitical uncertainties and a weak trend in Asian markets.
The 30-share BSE Sensex declined 116.67 points, or 0.16 per cent, to settle at 74,243.34. During the day, it hit a high of 74,717.57 and a low of 73,988.75, gyrating 728.82 points.
The 50-share NSE Nifty dipped 49.85 points, or 0.21 per cent, to end at 23,366.70.
The Reserve Bank of India (RBI) Friday kept its benchmark repo rate unchanged at 5.25 per cent, as expected, and announced a raft of measures to attract foreign capital and support the rupee amid growing risks to growth and inflation from the prolonged West Asia conflict, elevated energy prices and global supply-chain disruptions.
To support the rupee, the measures included scrapping taxes on interest income and capital gains for eligible foreign investors in government securities, offering concessional terms for foreign-currency deposits from non-resident Indians and subsidising hedging costs for select offshore borrowings.
The Monetary Policy Committee (MPC) unanimously voted to leave the policy repo rate unchanged at 5.25 per cent, and continue with its “neutral” stance.
From the 30-Sensex firms, Trent, Tata Consultancy Services, Tata Steel, NTPC, HCL Tech, and Bharti Airtel were among the biggest laggards.
Hindustan Unilever, Axis Bank, Adani Ports, and Bajaj Finance were among the biggest gainers.
The RBI lowered its growth expectations for the current fiscal year, projecting real GDP growth at 6.6 per cent in 2026-27, below the 6.9 per cent April forecast. The projection is also lower than 7.6 per cent estimated for 2025-26.
It forecast inflation to rise to 5.1 per cent in 2026-27, with price pressures expected to peak at 5.9 per cent in the third quarter before easing.
“Domestic equities closed flat as the monetary policy outcome aligned with expectations, while supportive measures announced by the RBI governor helped strengthen the rupee. However, the downward revision in growth forecasts and a calibrated inflation outlook prompted profit booking as investors reassessed near-term demand and earnings prospects,” Vinod Nair, Head of Research, Geojit Investments Limited, said.
The government said it would scrap taxes on interest income and capital gains for eligible foreign investors in government securities from April 1, 2026, while the RBI broadened the universe of sovereign bonds available under its unrestricted foreign investment route.
The central bank also announced concessional forex swaps for state-run firms raising overseas debt and said it would bear hedging costs on fresh three-to five-year FCNR(B) deposits until September 30 to attract dollar inflows from non-resident Indians.
Together, the measures are aimed at shoring up the rupee which has plunged over 6 per cent this year on war-driven surge in crude prices and record foreign fund outflows.
Alongside the policy decision, the RBI and the government announced a broad package of measures to attract foreign capital and support the Indian rupee amid persistent FPI outflows, Amar Ambani, Executive Director and Head Institutional Equities Research, YES Securities, said.
Brent crude, the global oil benchmark, dipped 0.11 per cent to USD 94.93 per barrel.
In Asian markets, South Korea’s Kospi, Japan’s Nikkei 225 index, Shanghai’s SSE Composite index and Hong Kong’s Hang Seng index ended lower. The Kospi sank 5.5 per cent.
Markets in Europe were quoting mostly higher.
US markets ended mostly higher Thursday.
“Indian equity markets ended on a mildly negative note, reflecting a lack of conviction among investors amid mixed global signals and persistent domestic concerns. Although the Nifty opened higher, gains proved short-lived as selling pressure emerged through the day, highlighting the market’s continued sensitivity to external risks and macroeconomic uncertainties,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.
Globally, Israel-Lebanon’s latest ceasefire showed little signs of holding as Hezbollah rejected the terms and Israel signalled its offensive would continue, putting additional pressure on the broader US-Iran peace process as the Lebanon ceasefire had been seen as a key step toward removing a major obstacle between Washington and Tehran, he added.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 4,447.06 crore Thursday, according to exchange data.
On Thursday, the Sensex went up marginally by 13.84 points, or 0.02 per cent, to settle at 74,360.01. The Nifty eked out a marginal gain of 10.95 points, or 0.05 per cent, to end at 23,416.55.
PTI
