The Indian stock market continued its upward momentum on Thursday, June 5, 2025, with the SENSEX and NIFTY50 indices closing higher for the second straight session. Fueled by optimism surrounding a potential rate cut by the Reserve Bank of India (RBI), the SENSEX soared by as much as 913 points during the day, while the NIFTY50 touched an intraday high of 24,900. The rally was led by strong performances from index heavyweights such as Reliance Industries, ICICI Bank, HDFC Bank, ITC, Eternal, and Power Grid.
Market Performance: A Closer Look
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SENSEX: The benchmark index closed 444 points higher at 81,442, reflecting robust investor confidence.
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NIFTY50: The index advanced 131 points, settling at 24,751, driven by gains in key sectors.
The market’s optimism was largely attributed to expectations of an RBI rate cut, potentially to be announced on Friday, June 6, 2025. Analysts suggest that the Monetary Policy Committee (MPC), led by RBI Governor Sanjay Malhotra, may reduce the repo rate by 25 basis points (bps) or even a more aggressive 50 bps to stimulate economic growth. This move comes amid global uncertainties, including concerns over tariff policies signaled by U.S. President-elect Donald Trump.
Why the Rate Cut Matters
The RBI has already lowered the repo rate by 25 bps in both February and April 2025, bringing it to 6%. A third consecutive rate cut could further boost liquidity and encourage investment, supporting India’s economic growth trajectory. Analysts note that such measures are critical in countering global economic headwinds and fostering domestic market resilience.
Key Drivers of the Rally
The gains in the SENSEX and NIFTY50 were powered by strong performances from:
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Reliance Industries: A cornerstone of the Indian market, contributing significantly to the indices’ upward movement.
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ICICI Bank: Strong banking sector performance bolstered investor sentiment.
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HDFC Bank, ITC, Eternal, and Power Grid: These stocks added to the bullish momentum, reflecting strength across diverse sectors.
What’s Next for Investors?
With the RBI’s policy decision on the horizon, market participants are closely monitoring for signals of a 25 bps or 50 bps rate cut. Such a move could further fuel optimism in sectors like banking, real estate, and consumer goods, which are sensitive to interest rate changes. However, global factors, including U.S. trade policies, may continue to influence market dynamics.
Key Takeaways
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The SENSEX and NIFTY50 indices closed higher for the second straight session, driven by heavyweights like Reliance Industries and ICICI Bank.
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Optimism around a potential RBI rate cut, expected on Friday, June 6, 2025, lifted investor sentiment.
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The repo rate, currently at 6%, may see a further reduction of 25-50 bps to spur economic growth.
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Investors should remain vigilant of global economic developments, particularly U.S. tariff policies, which could impact market trends.
Stay tuned for updates on the RBI’s policy announcement and its impact on the Indian equity markets.
