Indian Markets End Week Lower Despite RBI Rate Cut Boost

Indian stock markets recorded slight declines this week after touching fresh highs and posting gains for three straight weeks, as investors booked profits.

Despite the pullback, sentiment improved towards the end of the week following a surprise 25-basis-point policy rate cut by the Reserve Bank of India (RBI), which boosted confidence.

The Nifty closed the week 0.37 per cent lower at 26,186, while the Sensex slipped 0.27 per cent to finish at 85,712.

Earlier gains driven by upbeat economic cues, including strong Q2 GDP growth and healthy automobile sales, faded as foreign investors continued selling, the rupee weakened sharply, and trade-related uncertainties persisted.

The broader market lagged behind the benchmarks, with the Nifty Midcap100 dropping 0.73 per cent and the Smallcap100 retreating 1.80 per cent for the week.

A positive shift came on Friday, when the RBI’s rate cut, paired with softer inflation projections and liquidity support, sparked buying interest.

Auto and IT stocks contributed most of the gains, supported by festive demand and favourable currency trends.

In contrast, banking, financials, consumer durables, power, chemicals and oil & gas shares underperformed.

Technical analysts noted that as long as Nifty holds above the 26,050–26,000 zone, the broader uptrend remains intact.

Resistance is seen near 26,350–26,500, while a fall below 26,000 may trigger further profit-taking.

Market observers believe India’s solid economic footing, despite global uncertainties and tariff headwinds, positions equities well for potential inflows if global investors return to emerging markets.

Attention now turns to the upcoming US Federal Reserve policy outcome.

Traders expect a 25-bps rate cut, after recent remarks from Fed officials and data suggesting a cooling US labour market.

Analysts say a shift in US monetary policy could influence currency movements and significantly impact foreign portfolio flows into India and other emerging economies.