More Stories

Informist, Wednesday, Oct. 1, 2025

 

By Simran Rede

 

MUMBAI – Shares of banks and financial services are likely to rise in the near term following the measures announced by the Reserve Bank of India for the sector in the monetary policy on Wednesday. These stocks, which constitute a major portion of the Nifty 50, will continue to push the index higher going forward, analysts said.

 

The Nifty 50 settled at 24836.30, up 225.20 points or 0.9%. The BSE Sensex closed at 80983.31, up 715.69 points or 0.9%. The rise was primarily due to the slew of measures announced by Reserve Bank of India Governor Sanjay Malhotra for the banking sector in the monetary policy. Technical analysts expect the Nifty 50 to find support at 24700-24600 and face resistance at 25000-25100 levels.

 

The Monetary Policy Committee on Wednesday unanimously voted to keep the repo rate unchanged at 5.50%. The committee also retained its "neutral" policy stance, though two of its members favoured a shift in stance to "accommodative" from "neutral". The governor said that, although current macroeconomic conditions and outlook have opened up policy space for further supporting growth, the MPC voted to keep rates unchanged, as the impact of the front-loaded monetary policy actions and recent fiscal measures is still unfolding.

 

The governor announced several steps for the banking sector, including a framework for Indian banks to finance acquisitions by Indian corporates. Additionally, lending limits for banks against shares were increased from INR 2 million to INR 10 million, as well as for initial public offering financing, from INR 1 million to INR 2.5 million per person.

 

Analysts believe Wednesday's rebound reflects improving sentiment and hints at early signs of a potential shift in market direction. The MPC sees "some room has opened" up for further rate cuts to support domestic growth, which is expected to see downward pressure in Oct-Mar from the US tariffs, Deputy Governor Poonam Gupta said Wednesday. 

 

Most analysts expect the RBI to cut the interest rate by 25 basis points at the December meeting, bringing the repo rate to 5.25%, if the 50% US tariffs remain in place until the end of the year. While most market participants believe that the RBI will cut the key interest rates in the next policy meeting, Pravin Bokade, head of research at IDBI Capital Markets & Securities, does not see a cut in the interest rates in the next policy meeting. The RBI will gauge the US Federal Reserve's next policy action. "If the Fed cuts, then probably they (RBI) will have the ammunition to cut. If the Fed doesn't go for an aggressive rate cut because inflation in the US is high, then probably the RBI will have no ammunition to cut rates. Otherwise, that will cause the depreciation in the rupee again," he said.

 

The rupee ended 0.1% higher at 88.6900 a dollar Wednesday due to positive sentiment in the market after the central bank rolled out a series of measures, including steps to promote internationalisation of the Indian currency. The rupee had hit record low levels Tuesday, pressured by trade tensions and a hike in US H1-B visa fees. In recent times, the depreciation of the rupee against the US dollar, muted corporate earnings growth in India, and better returns in competing markets such as China, South Korea, and Taiwan have resulted in an outflow of investments by foreign institutional investors in India.

 

"I think the dollar has been depreciating against major currencies. So if the rupee also starts to strengthen, at that time I think FIIs will come back," Bokade said. He expects the Indian currency to depreciate to the 89–90 level. "But I guess since the dollar has been depreciating against large other currencies... and if that happens, and then the pace in the dollar depreciation quickens, then probably the rupee should be able to hold or at least strengthen. Not immediately, it will take one or two quarters. And during that time, if earnings growth is there, then at that time I think probably FIIs will come," he said. 

 

The earnings of Indian companies are expected to be decent in the December quarter as compared to the first two quarters of the current financial year. Based on the earnings, he believes the market will likely recover. The management commentaries from companies in sectors such as banking, consumer discretionary, and consumer staples are expected to be positive and will support the market, analysts said. 

 

Apart from banking and financial services, sectors such as the automobile and fast-moving consumer goods industries are expected to benefit from strong monsoon rains, which will boost rural demand and sales following the cut in goods and services taxes. Auto ancillaries companies are also expected to gain from proposed electric vehicle safety mandates. The banking and realty sectors may see momentum, with PSU banks potentially having an upper hand due to softening yields, analysts said. The pharmaceutical sector is expected to face headwinds from the 100% US tariffs on patented drugs, which take effect on Wednesday.  End

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.