Sensex up 447 pts, Nifty tops 26,150 as RBI cuts repo rate; will rally continue next week?
Across the broader market, the BSE 100 index climbed 0.56%, while the BSE Largecap index advanced 0.51%.
- Dec 5, 2025,
- Updated Dec 5, 2025 4:07 PM IST
Domestic equity benchmarks Sensex and Nifty extended their gains for a second straight session on Friday, cheered by a dovish stance from the Reserve Bank of India. The Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, slashed the repo rate by 25 basis points, bringing it down to 5.25%.
At the close, the Sensex surged 447.05 points, or 0.52%, to finish at 85,712.37. The Nifty50 gained 152.70 points, or 0.59%, to close at 26,186.45.
State Bank of India (SBI) topped Sensex gainers, rising 2.46% to Rs 971.40. Bajaj Finserv followed with a 2.08% jump. Other major contributors included Bajaj Finance, Maruti Suzuki, HCL Technologies and Larsen & Tuobro, which advanced 1.89%, 1.80%, 1.68% and 1.38%, respectively.
Five stocks, namely, SBI, HDFC Bank, L&T, Infosys and Bajaj Finance, contributed heavily to the Sensex’s gain.
On the sectoral front, the BSE Bankex surged 0.86% to settle at 67,018.67, spearheading the gains. The BSE Auto index also ended in the green, rising 0.57% to close the session at 62,112.92.
Across the broader market, the BSE 100 index climbed 0.56%, while the BSE Largecap index advanced 0.51%.
Overall, of the 4,302 actively traded BSE stocks, 1,817 closed higher, 2,302 declined, and 183 remained unchanged. During the session, 80 stocks touched their 52-week highs, while 261 fell to 52-week lows. Meanwhile, 159 scrips hit their upper circuits, and 212 were locked in lower circuits.
Vinod Nair, Head of Research at Geojit Financial Services, said Indian markets have reacted strongly to the RBI’s unexpected 25-basis-point rate reduction — a surprise development considering the strength of the Q2 GDP numbers.
Nair noted that this unexpected move, alongside significantly lower inflation projections and accommodative liquidity measures, has ignited a broad risk-on mood across the equity markets. Adding, “Rate-sensitive sectors such as autos, real estate, and NBFCs are leading the gains due to reduction in cost.”
“While private banks have also gained on expectation of treasury profits, concerns around net interest margins (NIM) have limited their upside. Overall, the short-term outlook remains cautiously positive, with a focus on strong corporate earnings in December. However, near-term risks such as a widening current account deficit and global trade tensions continue to pose challenges. The stance of the US Fed on rate cuts will be crucial for maintaining the domestic trend for the month," Nair said.
Indranil Pan, Chief Economist at Yes Bank, noted that the RBI reduced the policy repo rate by 25 basis points to 5.25% while retaining its monetary policy stance at neutral.
Pan said that the inflation guidance turned distinctly dovish, with the RBI lowering its FY26 inflation forecast by another 60 basis points to 2%. He added that the central bank chose to leverage the policy space created by easing price pressures to deliver a rate reduction.
“Further, to ensure transmission, it also acted preemptively on the liquidity front by announcing INR 1 trn of OMO purchases and a USD 5 bn buy-sell swap for December. The confidence on growth remains strong as the RBI suggest that the economic activity has held up in Q3FY26, though acknowledging that external uncertainties pose some downside risks to growth. We consider this as a dovish cut but indicate that RBI will continue to remain data driven. While we broadly think that the RBI is done with its cutting cycle, any further easing of monetary policy will probably depend on how growth dimensions pan out,” Pan added. Ajit Mishra, SVP–Research at Religare Broking Ltd, said the market spent most of Friday navigating sharp swings before eventually settling on a firm footing. According to him, traders remained guarded in early deals, but sustained strength in heavyweight counters across sectors gradually lifted overall sentiment. The Nifty finally closed near the day’s high at 26,186.45, gaining 0.59 percent. Mishra noted that banking, financials and IT stocks anchored the upmove, while broader indices showed divergence, with midcaps edging up 0.45 percent even as smallcaps slipped over half a percent.
Mishra pointed out that the RBI’s monetary policy outcome acted as the principal trigger behind the rebound. The MPC’s unanimous decision to trim the repo rate by 25 bps to 5.25 percent, retain a neutral stance, upgrade the FY26 GDP projection to 7.3 percent and scale down CPI inflation expectations to 2 percent provided a clear boost to sentiment. He said the policy cues spurred renewed interest in rate-sensitive lenders and NBFCs, effectively cushioning the market from mixed global trends.
On the technical front, Mishra highlighted that the Nifty’s rebound from the 20-DEMA zone—coinciding with trendline support of the rising channel around 25,900–26,000—reinforces a constructive market setup. He expects the prevailing uptrend to extend towards the 26,300–26,500 band. However, Mishra cautioned that with volatility persisting and leadership shifting across sectors, investors should maintain a selective approach and adhere to disciplined risk management.
Domestic equity benchmarks Sensex and Nifty extended their gains for a second straight session on Friday, cheered by a dovish stance from the Reserve Bank of India. The Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, slashed the repo rate by 25 basis points, bringing it down to 5.25%.
At the close, the Sensex surged 447.05 points, or 0.52%, to finish at 85,712.37. The Nifty50 gained 152.70 points, or 0.59%, to close at 26,186.45.
State Bank of India (SBI) topped Sensex gainers, rising 2.46% to Rs 971.40. Bajaj Finserv followed with a 2.08% jump. Other major contributors included Bajaj Finance, Maruti Suzuki, HCL Technologies and Larsen & Tuobro, which advanced 1.89%, 1.80%, 1.68% and 1.38%, respectively.
Five stocks, namely, SBI, HDFC Bank, L&T, Infosys and Bajaj Finance, contributed heavily to the Sensex’s gain.
On the sectoral front, the BSE Bankex surged 0.86% to settle at 67,018.67, spearheading the gains. The BSE Auto index also ended in the green, rising 0.57% to close the session at 62,112.92.
Across the broader market, the BSE 100 index climbed 0.56%, while the BSE Largecap index advanced 0.51%.
Overall, of the 4,302 actively traded BSE stocks, 1,817 closed higher, 2,302 declined, and 183 remained unchanged. During the session, 80 stocks touched their 52-week highs, while 261 fell to 52-week lows. Meanwhile, 159 scrips hit their upper circuits, and 212 were locked in lower circuits.
Vinod Nair, Head of Research at Geojit Financial Services, said Indian markets have reacted strongly to the RBI’s unexpected 25-basis-point rate reduction — a surprise development considering the strength of the Q2 GDP numbers.
Nair noted that this unexpected move, alongside significantly lower inflation projections and accommodative liquidity measures, has ignited a broad risk-on mood across the equity markets. Adding, “Rate-sensitive sectors such as autos, real estate, and NBFCs are leading the gains due to reduction in cost.”
“While private banks have also gained on expectation of treasury profits, concerns around net interest margins (NIM) have limited their upside. Overall, the short-term outlook remains cautiously positive, with a focus on strong corporate earnings in December. However, near-term risks such as a widening current account deficit and global trade tensions continue to pose challenges. The stance of the US Fed on rate cuts will be crucial for maintaining the domestic trend for the month," Nair said.
Indranil Pan, Chief Economist at Yes Bank, noted that the RBI reduced the policy repo rate by 25 basis points to 5.25% while retaining its monetary policy stance at neutral.
Pan said that the inflation guidance turned distinctly dovish, with the RBI lowering its FY26 inflation forecast by another 60 basis points to 2%. He added that the central bank chose to leverage the policy space created by easing price pressures to deliver a rate reduction.
“Further, to ensure transmission, it also acted preemptively on the liquidity front by announcing INR 1 trn of OMO purchases and a USD 5 bn buy-sell swap for December. The confidence on growth remains strong as the RBI suggest that the economic activity has held up in Q3FY26, though acknowledging that external uncertainties pose some downside risks to growth. We consider this as a dovish cut but indicate that RBI will continue to remain data driven. While we broadly think that the RBI is done with its cutting cycle, any further easing of monetary policy will probably depend on how growth dimensions pan out,” Pan added. Ajit Mishra, SVP–Research at Religare Broking Ltd, said the market spent most of Friday navigating sharp swings before eventually settling on a firm footing. According to him, traders remained guarded in early deals, but sustained strength in heavyweight counters across sectors gradually lifted overall sentiment. The Nifty finally closed near the day’s high at 26,186.45, gaining 0.59 percent. Mishra noted that banking, financials and IT stocks anchored the upmove, while broader indices showed divergence, with midcaps edging up 0.45 percent even as smallcaps slipped over half a percent.
Mishra pointed out that the RBI’s monetary policy outcome acted as the principal trigger behind the rebound. The MPC’s unanimous decision to trim the repo rate by 25 bps to 5.25 percent, retain a neutral stance, upgrade the FY26 GDP projection to 7.3 percent and scale down CPI inflation expectations to 2 percent provided a clear boost to sentiment. He said the policy cues spurred renewed interest in rate-sensitive lenders and NBFCs, effectively cushioning the market from mixed global trends.
On the technical front, Mishra highlighted that the Nifty’s rebound from the 20-DEMA zone—coinciding with trendline support of the rising channel around 25,900–26,000—reinforces a constructive market setup. He expects the prevailing uptrend to extend towards the 26,300–26,500 band. However, Mishra cautioned that with volatility persisting and leadership shifting across sectors, investors should maintain a selective approach and adhere to disciplined risk management.