Sensex Surges Up to 600 Points as RBI Shifts Policy Stance to Neutral

Dalal Street staged an intraday comeback on October 9, breaking free from a multi-session losing streak that had rattled investor confidence. Benchmark indices climbed sharply in morning trade, with the BSE Sensex jumping nearly 600 points to touch an intraday high of 82,319.21, while the NSE Nifty50 surged around 200 points to cross the 25,200 mark. The rebound was largely catalysed by the Reserve Bank of India’s (RBI) monetary policy decision and selective bargain hunting at oversold levels.

RBI MPC Decision and Neutral Stance

The primary domestic catalyst behind the market optimism was the conclusion of the RBI Monetary Policy Committee (MPC) meeting. The central bank voted 5:1 to hold the benchmark repo rate unchanged at 6.50% for the tenth consecutive meeting. More importantly, Governor Shaktikanta Das announced a shift in the monetary stance from "withdrawal of accommodation" to "neutral".

This shift was widely cheered by market participants as it indicates the central bank’s confidence in the disinflation process while offering flexibility to ease monetary policy should growth conditions require support. The RBI also retained its real GDP growth forecast for FY25 at 7.2%, reflecting faith in India’s macroeconomic resilience.

Key Catalysts Fueling the Rebound

Several domestic and external triggers combined to underpin Wednesday's rally:

• Policy Pivot Optimism: The switch to a neutral stance officially opens the door for potential interest rate cuts in coming quarters, brightening the outlook for rate-sensitive sectors such as real estate, autos, and banking.
• Bargain Hunting After Steep Correction: Benchmark indices had endured heavy selling in preceding sessions amid heightened Middle East tensions and sustained foreign institutional investor (FII) outflows, leaving multiple quality counters in technically oversold territory.
• Crude Oil Pullback: International crude prices took a breather following rapid spikes earlier in the week, easing imported inflation concerns for a net-importing economy like India.
• Global Bond Index Support: Sentiment received an added boost from FTSE Russell’s announcement to include Indian sovereign bonds in its Emerging Markets Government Bond Index, pointing to sustained foreign debt inflows.

Broader Markets and Sectoral Trends

Broader markets displayed marked resilience, outperforming the frontline gauges. The Nifty Midcap index gained roughly 1%, while the Nifty Smallcap 100 rallied more than 1.3% as retail and domestic institutional investors picked up beaten-down shares.

Sectoral participation was led by defensive and interest rate-sensitive segments, with pharma and realty indices surging over 2% each.

Top Movers on the Benchmark

Leading gainers that supported the morning surge included:

• Trent, Cipla, and Tata Motors: Advanced between 1.5% and 2.6% on strong buying interest.
• State Bank of India and Tech Mahindra: Stood out among heavyweight gainers supporting the benchmark push.

While indices witnessed slight profit taking near resistance levels in later trade, the policy pivot provided welcome reassurance that domestic macroeconomic fundamentals remain well-anchored.

Tags: BSE Sensex NSE Nifty50 Reserve Bank of India Monetary Policy Committee Tata Motors State Bank of India