Benchmarks trade in positive terrain; auto shares gear up

The key equity indices traded with moderate gains in mid-afternoon trade after the RBI cuts the repo rate by 25 basis points to 5.25%. The Nifty traded above the 26,150 mark. Traders are tracking ongoing IPO activity, crude oil trends and global cues. Market participants are also looking ahead to the US Personal Consumption Expenditure data scheduled for release on Friday, which could influence Fed policy.

Auto shares jumped after declining in the past two trading sessions.

At 14:29 IST, the barometer index, the S&P BSE Sensex, advanced 351.39 points or 0.41% to 85,616.71. The Nifty 50 index jumped 123.65 points or 0.47% to 26,155.75.

In the broader market, the S&P BSE Mid-Cap index rose 0.18% and the S&P BSE Small-Cap index fell 0.70%.

The market breadth was negative. On the BSE, 1,726 shares rose and 2,055 shares fell. A total of 221 shares were unchanged.

Economy:

The Reserve Bank of India Governor Sanjay Malhotra, announcing the fifth bi-monthly policy review of FY26 said that RBIs MPC has unanimously decided to reduce the policy repo rate by 25 basis points to 5.25%, keeping its stance neutral.

The MPC voted unanimously to reduce the rate under the liquidity adjustment facility, which also revised the standing deposit facility (SDF) rate to 5% and the marginal standing facility (MSF) and Bank Rate to 5.50%, while maintaining a neutral stance.

The RBI raised its real GDP growth forecast for FY26 to 7.3% from 6.8% earlier, expecting 7% growth in Q3 and 6.5% in Q4. For Q1 and Q2 FY27, growth is projected at 6.7% and 6.8%, respectively.

The CPI inflation forecast for FY26 was lowered to 2% from 2.6%, with expectations of 0.6% in Q3 and 2.9% in Q4. CPI for Q1 and Q2 FY27 is projected at 3.9% and 4%.

The MPC noted that headline inflation has eased sharply due to exceptionally benign food prices, while core inflation has softened and is expected to stay anchored near the 4% target in the first half of FY27.

The committee said the balance between growth and inflation continues to offer policy space to support economic momentum.

The minutes of the meeting will be published on 19 December, and the next MPC meeting will be held from 4 to 6 February 2026.

Buzzing Index:

The Nifty Auto index jumped 0.56% to 27,886.75. The index fell 0.88% in the past two consecutive trading sessions.

Maruti Suzuki India (up 1.36%), Mahindra & Mahindra (up 1.11%), Eicher Motors (up 1.02%), Bharat Forge (up 0.57%), Uno Minda (up 0.32%), TVS Motor Company (up 0.23%), Ashok Leyland (up 0.12%), Bajaj Auto (up 0.07%), Bosch (up 0.04%) advanced.

Numbers to Track:

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 89.8100 compared with its close of 89.8950 during the previous trading session.

MCX Gold futures for 5 February 2025 settlement rose 0.38% to Rs 130,570.

In the commodities market, Brent crude for January 2025 settlement fell 2 cents or 0.03% to $63.24 a barrel.

Stock in Spotlight:

Tenneco Clean Air India rose 0.05%. The company reported 10% increase in consolidated net profit to Rs 150.49 crore on 9.58% rise in revenue from operations to Rs 1,280.64 crore in Q2 FY26 over Q2 FY25.

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