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Informist, Wednesday, Oct. 1, 2025

By Simran Rede

MUMBAI – Gains in banking stocks helped the headline equity indices end sharply higher Wednesday. Banking stocks gathered momentum after the Reserve Bank of India's Monetary Policy Committee proposed a review of capital market exposure guidelines for banks.

Both the Nifty 50 and the BSE Sensex recovered gradually from a muted start after RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee had voted unanimously to keep the repo rate unchanged at 5.50%. The committee also retained its "neutral" policy stance though two of its members were of the view that it should be changed to "accommodative". The governor said the decision to keep the policy rate unchanged was a fallout of the inflation outlook turning out to be more benign than previously projected.

The Nifty 50 closed 0.9% higher at 24836.30 points, up 225.20 points. The index snapped an eight-session losing streak during which it had fallen over 3%. The BSE Sensex also ended 0.9% higher at 80983.31 points, up 715.69 points. The India Volatility Index fell 7% to 10.2875, giving traders extra comfort. The index, the market's fear gauge, fell for the third straight session.

Most banking stocks led gains in the market with HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and Axis Bank boosting the Nifty 50. The proposed review of capital market exposure guidelines will provide an enabling framework for banks to finance acquisitions by Indian corporations. It will also enhance the limit for lending against shares and units of real estate and infrastructure investment trusts while removing the regulatory ceiling altogether on lending against listed debt securities. A more principles-based framework for lending to capital market intermediaries is also proposed, the RBI said.

From these structural moves, the central bank has expanded the scope for lending by Indian banks, allowing them to finance mergers and acquisitions by domestic companies, Equirus Capital said in a note. "This is seen as a major boost for the banking sector, potentially shifting deal financing away from private credit and into the formal banking system," the broking firm said. These measures enhance credit flows, improve the ease of doing business for exporters, and advance the internationalisation of the rupee, Harsha Vardhan Agarwal, president of the Federation of Indian Chambers of Commerce and Industry, said in a note.

The RBI raised its GDP growth projection for the financial year 2025-26 (Apr-Mar) to 6.8% from the earlier 6.5%. It also raised the growth estimate for the September quarter to 7% from 6.7%. This reflects the underlying resilience of the economy and the positive impact of recent policy initiatives, particularly the rationalisation of goods and services tax, FICCI's Agarwal said. However, the central bank slashed its growth projections for the remaining quarters of the current fiscal year as well as for the June quarter of FY27.

Going ahead, analysts do not see any correction in the market. "Overall, if you see the policy from the monetary ... side ..., they are positive and a lot of liquidity is there in the hope that the monetary and fiscal policy will show some positive result," Pravin Bokade, head of research at IDBI Capital Markets & Securities, said. "I think it is a matter of time and we should see the positive results. I think the investors will be slightly, not very, bullish, but then they will keep on holding the stocks. I don't see any panic in the market."

The rupee ended 0.1% higher at 88.6900 a dollar Wednesday owing to positive sentiment in the market after the RBI rolled out a series of foreign exchange measures, including steps to promote internationalisation of the Indian currency. The rupee had hit a record low Tuesday, pressured by trade tensions and the increase in US H-1B visa application fee, prompting scrutiny of the RBI's intervention strategies versus allowing market adjustments, Prakash Prasad, economist at Punjab & Sind Bank, said in a report. "Liquidity remains sufficient, with ongoing VRR (variable rate repo) and VRRR (variable rate reverse repo) operations, plus the upcoming CRR (cash reserve ratio) cut tranche, expected to sustain balance without new injections," he said.

The broader market performed better than the benchmarks, with all the NSE small-cap and mid-cap indices closing 0.9-1.1% higher. Most automobile stocks rose Wednesday on the back of healthy monthly sales data. Most companies reported growth in their sales of commercial vehicles. Tata Motors ended 5.6% higher and was the top gainer in the Nifty 50.

Shriram Finance was the second-biggest gainer in the 50-stock index, rising 5.3%. The stock rose after the RBI's positive decisions on the banking and financial sector. At the open, the stock rose after the non-banking finance company late Tuesday denied a report published by The Economic Times of a majority stake sale. The newspaper had reported that Mitsubishi UFG Financial Group was in advanced talks to take a 20% stake in the company for about INR 232 billion. It cited people familiar with the matter.

Sun Pharmaceutical Industries rose 2.6% and was among the top gainers in the Nifty 50. Global brokerage Citi believes the pact between the US and Pfizer is positive for the company as it will remove the overhang of most-favoured-nations pricing for certain drugs and provide relief for the Indian pharmaceutical major's Ilumya portfolio.

The Nifty Media snapped a six-session losing streak to surge 4% on the back of a 15% jump in shares of Sun TV Network, which was the biggest gainer in the Nifty 500. The stock rose on the possibility of a rerating following reports that Indian Premier League franchise Royal Challengers Bangalore is being valued at $2 billion. This raises the chances of Sun TV-owned Sunrisers Hyderabad being valued at a similar level.

Epack Prefab Technologies fell 6.5% from the issue price of INR 204 to end at INR 190.66 on the NSE, after listing at INR 183.85, a discount of nearly 10% to the issue price. BMW Ventures fell over 25% to close at INR 74.10. The stock had listed at INR 78 on the NSE, a 21% discount to the issue price of INR 99. The third stock listed on the day was Jain Resource Recycling. The stock was listed at INR 265.05 on the NSE, a 14% premium to the issue price of INR 232. It eventually closed 37% higher at INR 318.06.

* Of the Nifty 50 stocks, 39 rose and 11 fell
* Of the Sensex stocks, 22 rose and 8 fell

* On the NSE, 2,198 stocks rose, 873 fell, and 87 were unchanged

* On the BSE, 2,797 stocks rose, 1,360 fell, and 134 were unchanged

* Nifty Media: up 4%; Nifty Private Bank: up 2%; Nifty PSU Bank: down 0.4%

BSE                                               NSE

Sensex: 80983.31, up 715.69 points or 0.9%        Nifty 50: 24836.30, up 225.20 points or 0.9%

End

Edited by Rajeev Pai

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