RBI Holds Repo Rate at 5.25%, Sensex Climbs 152 Points

The Reserve Bank of India held its policy repo rate at 5.25% for a fourth straight meeting Wednesday, and the BSE Sensex closed up 152.05 points, or 0.19%, at 78,581 after a volatile session.

Markets whipsawed through the day. The Sensex touched 79,055.38 in the first half, then fell 769.64 points to 78,285.74 by late afternoon before banking and auto shares recovered in the pre-close phase. The NSE Nifty edged up 9.75 points, or 0.04%, to 24,624.65, having ranged between 24,677.60 and 24,497.95. Seventeen of the Sensex's 30 constituents closed higher, 12 fell and one was unchanged.

Divergence between the two benchmarks dates to Monday, when stock exchanges introduced the Closing Auction Session (CAS) for shares carrying futures and options contracts. The CAS sets closing prices of eligible stocks through an auction rather than the last traded price, a change the bourses say makes price discovery more transparent.

The hold itself was unanimous. The six-member Monetary Policy Committee, led by Governor Sanjay Malhotra, voted to keep the repo rate at 5.25% and retain its 'neutral' policy stance. The RBI said it wants clearer evidence on whether higher energy costs from the Iran war feed broader inflationary pressures, and it raised its growth forecast for the current fiscal year to 6.7% from the 6.6% projected in June. Domestic growth held up on solid demand and manufacturing, with exports strong, the central bank said, despite global uncertainty from the West Asia conflict and trade tensions.

"The RBI's MPC has maintained the status quo while marginally upgrading FY27 GDP growth projection, citing a resilient domestic economy. Additionally, annual inflation estimates were lowered, indicating the governor's open minded approach, which suggested an optimistic view though further policy action would depend on data."

Vinod Nair, Head of Research, Geojit Investments Limited, said.

The RBI's caution tracks crude. Brent, the global oil benchmark, climbed 1.75% to $80.75 a barrel Wednesday. A crude inventory report showed supplies tightening ahead of the OPEC+ output decision.

Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said investors booked profits after the recent rally. The Nifty opened above its pre-CAS close and failed to build on early gains. Selling pressure built through the session, leaving a 'cautious undertone' despite supportive global cues.

Among Sensex constituents, UltraTech Cement, NTPC, State Bank of India, Mahindra & Mahindra, InterGlobe Aviation and Kotak Mahindra Bank led gains. Tata Consultancy Services, HCL Tech, Reliance Industries and Bharat Electronics fell.

Asian markets set a firm tone. South Korea's KOSPI jumped 3.76% and Japan's Nikkei 225 climbed 3.66%. Shanghai's SSE Composite and Hong Kong's Hang Seng finished higher. European markets traded in positive territory, and US stocks ended sharply higher Tuesday.

The advance pared part of the prior session's 210.08-point drop, which left the Sensex at 78,428.95. The Nifty had fallen 159.40 points to 24,614.90. Foreign institutional investors (FIIs) bought equities worth Rs 2,446.47 crore on Tuesday, exchange data showed.