Why Sensex rallied 800 pts, Nifty hit 24,850 after RBI Policy; key reasons

Broader market indices saw buying, Nifty MidCap 100 was up 0.29 per cent, and Nifty SmallCap 0.57 per cent

Indian benchmark indices Sensex and Nifty snapped an eight-day losing streak on Wednesday, October 1, 2025, after the Reserve Bank of India (RBI) maintained a status quo on repo rate. In the intra-day trade, Sensex jumped 801 points or 0.99 per cent to day’s high at 81,068.43 and Nifty50 advanced 256.85 points or 1.04 per cent to day’s high at 24,867.95.   Meanhwile, Sensex closed at  80,983.31, up 715.69 points or 0.89 per cent and NSE Nifty50 was at 24,836.3, up 225.2 points or 0.92 per cent.

 

On BSE, Tata Motors, Kotak Mahindra Bank, Sun Pharma and Trent were among the top gainers, while Bajaj Finance, SBI, Tata Steel, and UltraTech Cement were the only top laggards.  

Broader market indices closed higher, Nifty MidCap 100 was up 0.89 per cent, and Nifty SmallCap 1.01 per cent.  CATCH STOCK MARKET UPDATES LIVE

Three reasons why Sensex, Nifty snapped eight-day losing streak

RBI policy positives 

The Reserve Bank of India (RBI) announced to keep the repo-rate unchanged at 5.5 per cent. The monetary policy committee (MPC) also maintained its stance at ‘Neutral’. The move was broadly in line with market expectations, signalling room for further accommodation should the headline inflation numbers be higher, according to Chanchal Agarwal, CIO, Equirus Family Office. 

 

Further, a key positive development is the liberalisation of capital market lending norms. RBI raised prudential limits on loans against shares, financing against listed debt, and initial public offering (IPO) funding.

 

Meanwhile, MPC said in the statement that the growth outlook remains resilient, supported by domestic drivers, despite weak external demand. It is likely to get further support from a favourable monsoon, lower inflation, monetary easing, and the salubrious impact of recent goods and services tax (GST) reforms.

 

During its October meeting, the committee revised its growth forecast for FY26 upward to 6.8 per cent while lowering the consumer price index (CPI) forecast to 2.6 per cent.

Rally in rate sensitivities

RBI allowed banks greater flexibility to extend credit for acquisition financing. This move, according to Agarwal, is significant, as it enables banks to recapture flows that had increasingly shifted to structured credit players. In addition, policy thrust remained on widening credit intermediation – notably through measures permitting the expansion of Urban Cooperative Banks – aligning with the broader Viksit Bharat agenda of improving credit access and deepening the financial system.

 

For real estate, lower borrowing costs would have positively influenced affordability and purchasing decisions, particularly in the budget and mid-income segments. 

 

Last seen, Nifty Bank was 1.29 per cent, with Kotak Mahindra Bank, ICICI Bank, and Axis Bank rising over 2 per cent. Nifty Realty was up 0.71 per cent and Nifty Auto was up 0.6 per cent 

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Buy on dips, sell on rally market 

Kranthi Bathini, director of equity strategy, WealthMills Securities, believes that the investors are buying on dips. He believes the market is in a ‘Buy on dips, sell on rally’ phase.

 

In the last eight trading sessions, the BSE Sensex has shed 2,746 points, while the NSE Nifty 50 index has dropped 3.2 per cent or 813 points in the same period.

What should investors do?

Naveen Kulkarni, chief investment officer, Axis Securities PMS, said, “Valuations for most banks are comfortable, and clarity on pick-up in growth and improving asset quality metrics would warrant upside in banking stocks.” 

 

His top picks included: HDFC Bank, Kotak Bank, SBI, and Federal Bank.

 

Karthick Jonagadla, investment manager on smallcase, suggested accumulating quality banks, select non-banking financial companies and housing finance companies (NBFCs/HFCs), developers, and capital-market plays on dips, while retaining hedges for external shocks.