The key equity indices traded with minor cuts in the early afternoon trade as the Reserve Bank of India kept the repo rate unchanged at 5.5% and maintained a neutral policy stance. The Nifty hovered below the 24,650 mark.
Pharma shares declined as Donald Trump plans to impose new tariffs on pharmaceuticals. The index tumbled in the past two trading sessions.
At 12:25 IST, the barometer index, the S&P BSE Sensex, dropped 20.01 points or 0.02% to 80,690.24. The Nifty 50 index declined 37.10 points or 0.14% to 24,613.60.
The broader market underperformed the frontline indices. The S&P BSE Mid-Cap index declined 0.79% and the S&P BSE Small-Cap index fell 1.12%.
The market breadth was weak. On the BSE, 1,204 shares rose and 2,656 shares fell. A total of 167 shares were unchanged.
RBI Monetary Policy Meeting Outcome:
Banking stocks edged lower after the Reserve Bank of India’s Monetary Policy Committee (MPC) unanimously decided to keep the policy repo rate unchanged at 5.5% in its latest review, concluding on 6 August 2025.
The committee maintained its stance amid global uncertainties and a resilient domestic economy, choosing to allow more time for the transmission of its earlier rate cuts.
Accordingly, the standing deposit facility (SDF) rate remains at 5.25%, while the marginal standing facility (MSF) rate and the bank rate are unchanged at 5.75%.
The RBI reiterated its commitment to achieving the medium-term inflation target of 4%, within a tolerance band of +/- 2%, while continuing to support growth. It noted that the global environment remains uncertain, with muted growth and uneven disinflation, although financial volatility has eased somewhat.
On the domestic front, growth remains stable. Rural consumption and robust government capital spending are supporting demand, while a normal monsoon is benefiting agriculture. Services and construction activity remain strong, although industrial performance is uneven, weighed down by electricity and mining.
The central bank retained its real GDP growth forecast for FY26 at 6.5%, with quarterly projections of 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. For Q1 FY27, growth is projected at 6.6%, with risks broadly balanced.
On inflation, the RBI lowered its CPI forecast for FY26 to 3.1%, down from the earlier 3.7%. Quarterly inflation is now seen at 2.1% in Q2, 3.1% in Q3, and 4.4% in Q4. CPI inflation for Q1 FY27 is projected at 4.9%. The central bank noted that average inflation this year is expected to remain well below the target, largely due to easing food prices, although inflation may edge above the 4% mark from Q4 onwards.
The RBI highlighted that the full impact of the 100 basis points of rate cuts since February 2025 is still unfolding. Given the current macroeconomic conditions and external risks, the MPC decided to maintain the existing rate and continue with a neutral stance. It also signalled continued data monitoring to guide future policy moves.
The minutes of the meeting will be released on August 20, while the next MPC meeting is scheduled from September 29 to October 1.
Derivatives:
The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, up 0.98% to 11.83. The Nifty 31 July 2025 futures were trading at 24,669 at a premium of 55.4 points as compared with the spot at 24,613.60.
The Nifty option chain for the 28 August 2025 expiry showed a maximum call OI of 57.2 lakh contracts at the 25,000 strike price. Maximum put OI of 38.6 lakh contracts was seen at 24,000 strike price.
Buzzing Index:
The Nifty Pharma index declined 1.49% to 21,642.70. The index fell 2.31% in the past two trading sessions.
Divis Laboratories (down 3.71%), Laurus Labs (down 3.18%), Ajanta Pharma (down 2.88%), Granules India (down 2.76%) and Zydus Lifesciences (down 2.43%), Biocon (down 2.42%), Alkem Laboratories (down 2.2%), Dr Reddys Laboratories (down 2.14%), Natco Pharma (down 2.02%) and J B Chemicals & Pharmaceuticals (down 2%) delcined.
Stocks in Spotlight:
Bharti Airtel rose 0.31%. The company has reported 103.3% rise in consolidated net profit to Rs 5,948 crore in Q1 FY26 from Rs 2,925 crore in Q1 FY25. Total revenues increased by 28.5% YoY to Rs 49,463 crore in the April – June 2025 quarter. The growth was driven by strong momentum in both India and Africa.
CCL Products (India) tanked 6.06% after the company’s consolidated net profit fell 28.88% to Rs 72.44 crore in Q1 FY26, compared with Rs 101.86 crore in Q4 FY25. However, revenue from operations jumped 26.29% Quarter on Quarter (QoQ) to Rs 1,055.63 crore in Q1 FY26.