Despite a 25 bps repo rate cut by the RBI, Indian markets extended losses for a third consecutive session, weighed down by weak earnings, FII sell-off, and economic concerns.
February 7, 2025: The Indian stock market ended in red for the third consecutive session on February 7, despite the Reserve Bank of India’s (RBI) decision to cut the repo rate by 25 basis points (bps) to 6.25%. Hopes of a rebound were dashed as the Sensex declined by 198 points, or 0.25%, to close at 77,860, and the Nifty 50 slipped by 0.18% to 23,559.95.
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Sectoral Indices Performance
While the Nifty Metal index emerged as a bright spot, gaining 2.66%, most other sectors struggled:
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- Nifty Bank: Down 0.44%
- Financial Services: Down 0.51%
- PSU Bank and FMCG: Declined by 1.38% and 1.30%, respectively.
The BSE Smallcap index dropped 0.68%, while the BSE Midcap index managed to outperform with a 0.13% gain.
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Why Did Markets Fall Despite the Rate Cut?
- Rate Cut Already Priced In: The market had already factored in the RBI’s widely expected 25 bps rate cut, which failed to inspire investor confidence.
- Uncertainty Over Further Rate Cuts: RBI Governor Sanjay Malhotra provided no assurance about the continuation of rate cuts, adding to market uncertainty.
- Economic Concerns: A downward revision of the RBI’s GDP growth forecast for FY25—from 6.6% to 6.4%—fueled fears of a slowing economy.
- Weak Corporate Earnings: Disappointing quarterly results from several major companies dampened sentiment.
- FII Sell-Off: Foreign Institutional Investors (FIIs) continued their selling spree, driven by concerns over US bond yields, a weakening rupee, and global economic uncertainties.
Nifty 50 Technical Outlook
Despite the day’s losses, technical indicators suggest the Nifty 50 remains in a short-term positive trend as it stays above the 21 EMA. Analysts see support at 23,450 and resistance at 23,700. A move above this level could pave the way for a rally toward 24,050.
Key Takeaways
The market’s immediate focus will now shift back to corporate earnings and global economic cues. Relentless FII selling and weak domestic growth projections remain key challenges for the Indian equity market.
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