India’s stock market staged a strong comeback on Friday, 5 December 2025, after the Reserve Bank of India (RBI) delivered a widely anticipated 25-basis-point repo rate cut to 5.25%, unlocking a broad rally in rate‑sensitive sectors even as foreign outflows and a weak rupee kept investors cautious. [1]
By the closing bell:
- Sensex climbed 447 points (0.52%) to around 85,712
- Nifty 50 gained roughly 153 points (0.59%) to finish near 26,186 [2]
However, despite the positive “RBI day” bounce, the week still ended marginally lower for both indices, and market breadth remained weak, underscoring that this is still a narrow, large‑cap driven rally rather than a broad‑based surge. [3]
RBI’s Fifth Bi‑Monthly Policy: A “Goldilocks” Cut With Big Liquidity
The RBI’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, unanimously cut the repo rate from 5.50% to 5.25% while maintaining its stance at “neutral”. [4]
Key takeaways from the policy:
- Policy rates
- Repo rate: 5.25% (‑25 bps)
- Standing Deposit Facility (SDF): 5.0%
- Marginal Standing Facility (MSF) & Bank Rate: 5.5% [5]
- Growth upgrade
- Inflation comfort
- Liquidity & rupee support
- RBI will inject roughly ₹1.45 lakh crore liquidity via ₹1 lakh crore of bond purchases and a $5 billion dollar–rupee buy/sell swap during December. [10]
- FX reserves are around $686 billion, after recent drawdowns to support a rupee that briefly hit a record low near ₹90.42 per dollar earlier this week. [11]
Malhotra described the backdrop as a “rare goldilocks” phase — strong growth with rapidly falling inflation — giving the MPC room to stay “growth supportive” even as it keeps an eye on rupee stability and global risks. [12]
How markets read the move
Market strategists see this as:
- Positive for rate‑sensitive sectors – especially banks, NBFCs, autos and real estate, thanks to lower borrowing costs and clearer liquidity support. [13]
- Potentially the last rate cut in this easing cycle, given very low inflation and concerns about the weak rupee and potential overheating if liquidity stays too loose. [14]
Sensex & Nifty 50 Today: From Cautious Open to RBI‑Powered Rally
Flat start, then a post‑policy lift
- At the open, the Nifty 50 and Sensex traded slightly in the red, mirroring mixed global cues and nerves ahead of the policy decision. [15]
- After the 10 AM policy announcement, indices quickly reclaimed 26,000 (Nifty) and 85,500 (Sensex) as traders priced in the surprise combination of a rate cut, liquidity infusion and still‑robust growth guidance. [16]
- By the close,
- Sensex: ~85,712 (+447 pts, +0.52%)
- Nifty 50: ~26,186 (+152–153 pts, +0.59%) [17]
Despite this, the Nifty 50 and Sensex still finished the week marginally lower (around ‑0.4% for Nifty and ‑0.3% for Sensex), reflecting the damage from earlier sessions when FII outflows and a sliding rupee dominated sentiment. [18]
Sector Snapshot: PSU Banks, IT, Autos & Metals Lead the Charge
The RBI decision lit a fire under rate‑sensitive names. Sector‑wise performance on NSE looked like this: [19]
- Top gaining sectors
- Nifty PSU Bank: +1.51%
- Nifty IT: +0.9%
- Nifty Auto: +0.74%
- Nifty Metal: +0.67%
- Nifty Private Bank: +0.49%
- Sectors in the red (marginal)
- Nifty Media: ‑0.48%
- Nifty Consumer Durables: ‑0.07%
- Nifty Pharma: ‑0.05%
- Nifty FMCG: ‑0.01%
The message from sector moves is clear:
Banks and NBFCs are back in favour, while defensives such as FMCG and pharma were largely ignored on a day dominated by macro and rate headlines.
Top Gainers & Losers: NBFCs Shine, HUL & IndiGo Under Pressure
Nifty 50 top gainers (5 December 2025)
On the Nifty 50, 38 stocks advanced and 12 declined. [20]
Top gainers:
- Shriram Finance – up about 3.0–3.4%
- Emerged as the top Nifty performer, as lower policy rates are expected to reduce funding costs for NBFCs. [21]
- State Bank of India (SBI) – +2.49%
- Bajaj Finserv – around +2.1–2.2%
- Adani Enterprises – roughly +2.0%
- Maruti Suzuki – about +1.9% [22]
Across the broader financials basket, Mahindra & Mahindra Financial Services, Sundaram Finance, Cholamandalam Investment, Muthoot Finance, L&T Finance, Aditya Birla Capital, RBL Bank, Manappuram Finance and SBI Cards all rallied between roughly 2–6%, highlighting just how strong the “rate‑cut trade” was in NBFCs and banks. [23]
Nifty 50 top losers
Biggest losers on Nifty 50: [24]
- Hindustan Unilever (HUL) – ‑3.34%
- The stock slipped on the record date for the demerger of its ice‑cream business, prompting some profit‑taking and portfolio rebalancing. [25]
- Eternal – about ‑1.35%
- IndiGo (InterGlobe Aviation) – ‑1.27%; the stock has been volatile amid recent operational disruptions and regulatory scrutiny. [26]
- Trent – ‑0.85%
- Sun Pharma – ‑0.73%
Midcaps & smallcaps: winners and casualties
- Nifty Midcap 100: +0.49% to ~60,595
- Leaders included M&M Financial Services (+5.92%), Patanjali Foods (+3.64%), and SBI Cards (+3.56%). [27]
- Nifty Smallcap 100: ‑0.57% to ~17,508
- Dragged lower by names like Kaynes Technology (‑12.31%), Data Patterns (‑4.73%), and PG Electroplast (‑4.37%), where selling pressure continued amid valuation and stock‑specific concerns. [28]
On the BSE, the Smallcap index fell about 0.7%, and even the BSE Midcap index ended slightly lower, confirming that today’s rally was concentrated in select financials and large‑caps, not the broader universe. [29]
Market Breadth: Gains at the Top, Pain Below the Surface
The numbers behind the indices show that Dalal Street is still wrestling with an internal correction: [30]
- Stocks traded on NSE: 3,192
- Advances: 1,335
- Declines: 1,769
- Unchanged: 88
- 52‑week highs: 36
- 52‑week lows: 249
So even as Nifty 50 and Sensex hit new short‑term highs, a much larger group of shares is making fresh 52‑week lows — especially in the smallcap space where frothy valuations and tighter risk appetite are forcing investors to pare exposure. [31]
For investors, this means headline indices may not fully reflect the stress in broader portfolios, particularly for those heavily invested in high‑beta small and midcap themes.
Rupee, Bonds & Global Cues: The Macro Cross‑Currents
Rupee & FX reserves
- The rupee closed around 89.99 per US dollar, weakening by about 10 paise after the rate cut. [32]
- It remains close to record lows near 90.4, with recent FX reserve drawdowns hinting at RBI’s continued intervention to smooth volatility. [33]
While lower rates usually weigh on a currency, the RBI’s $5 billion FX swap and large OMO purchases are designed to maintain orderly conditions in both the bond and FX markets, even as it pivots more firmly toward growth. [34]
FII/DII flows
- Foreign institutional investors (FIIs) were net sellers of about ₹1,944 crore in the cash segment on Thursday, 4 December, continuing their recent risk‑off trend.
- Domestic institutional investors (DIIs) offset some of this with net buying of roughly ₹3,661 crore. [35]
Fresh flow data for Friday’s session will come in later, but the pattern remains: domestic institutions are providing strong support in 2025, while foreign investors are more cautious amid rupee weakness and global uncertainty. [36]
Global markets
Asian markets were mixed on Friday, with Japan’s Nikkei under pressure while Shanghai, Hang Seng and Kospi ended higher. Overnight, US indices were largely flat, with the Dow slipping slightly and the S&P 500 and Nasdaq posting modest gains as traders awaited key US inflation data and a potential Fed rate cut next week. [37]
What Analysts Are Saying After the RBI Move
Market commentators are broadly positive on the policy, but not euphoric:
- Many see today’s cut as likely the final move in the current easing cycle, given:
- Inflation far below the lower bound of the RBI’s target band
- A rupee hovering near record lows
- Already‑strong GDP growth around 8% in the first half of the year [38]
- Strategists at leading brokerages argue that:
- Banks may see near‑term margin pressure as lending rates adjust faster than deposit costs
- Autos, real estate and NBFCs stand to gain the most from cheaper credit and improved liquidity
- The combination of lower yields, ample liquidity and resilient growth creates a constructive backdrop for long‑duration bonds and high‑quality financials, provided inflation stays anchored. [39]
One common thread across brokerage notes: Valuations in frontline indices are no longer cheap, and with FIIs selling and the rupee weak, analysts expect more of a “sideways with an upward bias” market rather than a runaway rally. [40]
Technical Outlook: Key Levels for Nifty 50 & Bank Nifty
Short‑term technical and derivatives data suggest that bulls have the momentum, but are still boxed into a range for now. [41]
Nifty 50
- Immediate support zone: 25,950–26,000
- Next support: around 25,700
- Immediate resistance: 26,300–26,350
- Upside target on breakout: If Nifty closes decisively above 26,350, several analysts are eyeing 26,500–26,700 in the near term.
Options data for the current series show:
- Heavy call open interest at 26,100–26,200,
- Strong put interest near 26,000 and 25,800,
…indicating 26,000 is the key “battle line” in the very short term; sustained trade above this keeps the advantage with the bulls. [42]
Bank Nifty
- Support: roughly 59,300–59,400
- Resistance: 60,100–60,200
Given the strong move in PSU and private banks today, a breakout above 60,200 could extend the rally, but any slip back below 59,300 would revive worries about FII selling and rupee‑related stress in financials. [43]
What India Stock Market Today Means for Investors
For traders and investors, 5 December 2025 marks an important inflection point in this cycle:
- Policy stance has clearly shifted toward growth
- With inflation unusually low and growth robust, RBI is comfortable easing, but has signalled it will watch liquidity and the rupee carefully. [44]
- Rate‑sensitive sectors are back in focus
- Banks, NBFCs, autos and real estate are structurally better placed after today’s moves, though banks may see some near‑term margin squeeze before funding costs reset. [45]
- Breadth and smallcaps remain the weak link
- With hundreds of stocks at 52‑week lows, investors need to be selective in mid/smallcaps and avoid purely valuation‑driven speculation. [46]
- Global & currency risks haven’t gone away
- A soft US Fed, stable global yields and calmer geopolitics would help sustain India’s rally. But if the rupee’s weakness deepens or global risk-off returns, FIIs could accelerate selling. [47]
- Expect volatility, not a straight line
- With headline indices near record territory and valuation multiples elevated, most brokerages expect range‑bound but choppy trade, where stock and sector selection matter more than simply riding the index. [48]
As always, any investment decision should consider your time horizon, risk tolerance and asset allocation. Today’s RBI‑fuelled rally is encouraging for Indian equities, but it comes with pockets of stress beneath the surface and a macro backdrop that can still change quickly.
References
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