Nifty, Sensex slip after RBI holds repo rate; rate-sensitive stocks drag, Nifty PSU Bank drops 1.6%

RBI Policy: The Indian stock market benchmark indices, Sensex and Nifty 50, continued trading in the red on Friday after the Reserve Bank of India’s Monetary Policy Committee (RBI MPC) decided to keep the repo rate unchanged at 5.25%. The MPC also maintained a neutral policy stance. RBI governor Sanjay Malhotra further highlighted that the Indian economy remains on a strong footing.

Following the policy announcement, benchmarks fell to their day's low but later pared losses to trade around 0.3% lower.

The Sensex fell as much as 368 points, or 0.44%, to its day's low of 82,945.56, while the Nifty 50 shed 136 points, or 0.53%, to its intra-day low of 25,504.6. Nifty Midcap and Nifty Smallcap index underperformed benchamarks, tumbling over 1% each.

Rate-sensitive stocks saw sharp selling following the policy announcement, with banking and interest-linked sectors bearing the brunt. Nifty PSU Bank led the decline, sliding 1.7%, while Nifty Realty dropped 1.5%. Nifty Auto weakened 1.1%, Nifty Bank fell 0.7%, and Nifty Financial Services slipped 0.5%. Nifty Private Bank also ended marginally lower, down 0.2%.

Losses extended to other sectors as well. Nifty IT remained under pressure amid persistent concerns around AI-led disruption, tumbling over 2%. Nifty Metal and Nifty Pharma also closed more than 1% lower each. In contrast, Nifty FMCG managed to hold its ground and ended the session largely flat.

“From a sectoral perspective, policy continuity is supportive for banking and financial services, as stable rates aid net interest margins and improve visibility on credit growth, particularly for PSU banks with strengthening balance sheets.

Rate-sensitive sectors such as housing, automobiles and consumer durables stand to benefit from steady borrowing costs, while manufacturing, capital goods and infrastructure-linked sectors gain from policy predictability and ongoing capex momentum. Services remain the key growth engine, with medium-term support from recent trade agreements. Overall, the MPC’s stance reinforces macro stability, anchoring expectations and supporting a constructive medium-term outlook across sectors,” said Anil Rego- Founder and Fund Manager at Right Horizons PMS.

RBI Policy Outcome

The RBI MPC announced on Friday, February 6, that it had decided to keep the policy repo rate unchanged at 5.25%, while maintaining a “neutral” stance. RBI Governor Sanjay Malhotra said the decision reflected the strength of domestic economic fundamentals despite ongoing global uncertainties.

The move came after a 25 basis point rate cut in December, taking the cumulative reduction in the repo rate to 125 basis points since February last year.

Looking ahead, the Governor said the MPC would be guided by evolving macroeconomic conditions, with policy decisions anchored to the new series of GDP and inflation data. The central bank projected CPI-based retail inflation at 2.1% for FY26, indicating a comfortable inflation outlook.

Meanwhile, the RBI marginally raised its growth forecast for FY26, revising GDP growth to 7.4% from the earlier estimate of 7.3%.

Banks and Financial Services stocks

Within the Nifty Bank index, most stocks declined. Punjab National Bank, IndusInd Bank, Ban of Baroda, Union Bank of India, Canara Bank, SBI, YES Bank, IDFC First Bank, and Federal Bank lost between 1-2% each. HDFC Bank and AU Small Finance Bank fell around 0.5% each while ICICI Bank, Axis Bank and Kotak Bank were in the green.

Among financial services stocks, Muthoot Finance was the top dragger in the Nifty Fin Services index, down almost 3%. Moreover, REC, BSE, Shriram Finance, ICICI Prudential, HDFC Life, SBI Life, and ICICI General Insurance also lost between 1-3% each. Bajaj Finance remained positive.

Auto & Realty Sectors

In the auto sector rose, all except 1 constituent were trading lower. Uno Minda was the top loser, down 4% followed by Motherson and TI India, which shed over 3% each. Moreover, Sona Coms, Exide Industries, Bharat Forge, Bosch, and Bajaj Auto also lost over 1% each today. Ashok Leyland, Eicher Motor, TVS Motor, M&M and Maruti, meanwhile, declined over half a percent each whereas Hero Moto was in the green.

Nifty Realty also witnessed similar trend. Signature Realty lost over 3% followed by Oberoi Realty and Godrej Properties, down over 2% each. Anant Raj, Lodha, Sobha, DLF, and Brigade also fell between 0.5% to 1.5%. However, Phoenix rose 0.5%.

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