The Indian stock market closed in negative territory today (April 9, 2025), with the BSE Sensex falling 379.73 points (0.51%) to close at 73,847.15, while the NSE Nifty50 lost 136.70 points (0.61%) to end at 22,399.15 Moneycontrol. This decline came despite the Reserve Bank of India (RBI) cutting its key repo rate by 25 basis points.
RBI Rate Cut Details
The Reserve Bank of India, under Governor Sanjay Malhotra, reduced the repo rate by 25 basis points to 6%, marking its second consecutive rate cut following a similar reduction in February Reuters. The central bank also:
- Changed its policy stance to “accommodative” from “neutral”
- Lowered India’s GDP growth forecast for 2025-26 from 6.7% to 6.5%
- Maintained a benign inflation outlook
This monetary easing was primarily aimed at stimulating economic growth amid concerns about global trade tensions and their potential impact on India’s economy.
Banking Sector Impact
Despite the rate cut typically being a positive indicator for borrowers, banking stocks were among the hardest hit in today’s trading session:
- Public sector banks witnessed sharp declines, with Bank of India, Union Bank of India, Indian Bank, and Bank of Baroda falling nearly 4% ETMarkets.com
- Canara Bank, Punjab National Bank, and State Bank of India also declined between 1.5% and 2%
- Private sector banks such as Bandhan Bank, RBL Bank, YES Bank, and ICICI Bank dropped between 1% and 3.5%
- The Nifty Bank index was down nearly 1%, slipping below the 50,000 mark during the day
The reason for banking stocks’ negative reaction to a rate cut includes:
- Concerns over near-term margin pressure
- Slower transmission of lower rates on the cost of funds compared to loan yields
- Muted CASA (Current Account Savings Account) growth
- A tight liquidity environment in Q4 that could weigh on banks’ profitability
Sector-wise Performance
The market showed mixed sectoral performance today:
- FMCG Stocks: Outperformed with a rise of nearly 2%, buoyed by hopes of stronger demand following the rate cut and lower inflation forecast
- Consumer Durables: Posted modest gains of around 0.3%
- IT Sector: Worst hit with Nifty IT crashing over 2% due to continued concerns around global tariffs
- Pharma and Metal: Dropped more than 1.8% each
- PSU Bank and Realty: Declined over 1% each
- Gold Loan NBFCs: Significantly impacted with Muthoot Finance and IIFL Finance falling as much as 5% after the RBI announced plans to issue comprehensive guidelines on gold loans
Key Market Movers
Among the Nifty constituents:
Top Gainers:
- Nestle
- Hindustan Unilever (HUL)
- Tata Consumer Products
- Titan Company
- Power Grid Corp
Top Losers:
- Wipro
- State Bank of India (SBI)
- Larsen & Toubro (L&T)
- Trent
- Tech Mahindra
Global Factors Behind the Market Decline
The primary global factor influencing Indian markets is the escalating trade tensions between the United States and China:
- US President Donald Trump recently announced sweeping tariffs on imports
- China retaliated by imposing 34% duties on all US imports starting April 10
- The US has also imposed a 10% tariff on Australian goods
- Over 50 countries have reportedly reached out to the White House for tariff discussions
These developments have sparked fears of a global trade war and potential US recession, leading to significant market volatility worldwide. Global markets have seen substantial declines:
- US indices experienced their worst single-day performance since the pandemic began
- Asian markets such as Japan’s Nikkei 225 (down 7.1%) and Taiwan’s Taiex (down 9.8%) have been severely impacted
- An estimated $9 trillion in global market value has been wiped out in just two days
Market Outlook
Analysts suggest that while the current market decline is significant, it may offer opportunities for investors with a long-term perspective. As V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated: “Uncertainty reigns supreme. How global trade and the global economy evolve from this chaos remains to be seen. But market downturns will offer opportunities for brave investors with a long-term view” Moneycontrol.
The Indian economy is expected to remain resilient despite global headwinds, with government officials maintaining that India is still on track to meet its FY26 GDP growth target of 6.3%-6.8%, contingent on crude oil prices staying below $70 per barrel.
Today’s market response suggests that investors remain cautious about global economic uncertainties, which have overshadowed the potentially positive impact of the RBI’s accommodative monetary policy stance.
