Sensex Surges Nearly 700 Points as RBI Holds Rates Steady: What’s Fueling the Rally?

The Indian stock market roared to life today, with the BSE Sensex jumping nearly 700 points and the Nifty 50 climbing close to 1%, following the Reserve Bank of India’s (RBI) decision to keep the repo rate unchanged at 5.5% for the second consecutive meeting.

RBI’s Status Quo Sparks Investor Optimism
The RBI’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, maintained a neutral policy stance, signaling confidence in India’s growth-inflation dynamics. This move comes after a 50 basis point rate cut in June, and investors welcomed the continued pause as a sign of economic stability.

Why Is the Market Rising?
The rally was led by banking and financial stocks, which surged on expectations of stable net interest margins (NIMs). Top gainers included HDFC Bank, ICICI Bank, and Kotak Mahindra Bank, pushing the Nifty Bank index up over 1%.

Broader Market Momentum
Midcap and smallcap indices also posted gains, reflecting broad-based buying. Domestic institutional investors (DIIs) were net buyers, injecting ₹5,762 crore into the market, while foreign portfolio investors (FPIs) remained cautious, selling ₹2,327 crore worth of equities.

Global Context
Global cues remained mixed, with U.S. markets ending higher despite looming government shutdown concerns. Asian markets were subdued due to holidays in China and Hong Kong, while commodity prices showed stability amid OPEC+ production speculations.

Bottom Line: The RBI’s decision to hold rates steady has injected fresh confidence into Dalal Street, especially among banking and financial players. With inflation under control and growth projections intact, investors are betting on a stable macroeconomic environment to drive future gains.