Markets Defy Gravity as RBI Holds Repo Rate—But Trade War Jitters Linger

RBI plays it safe while global tensions simmer. Markets yawn—for now.

Steady hands or missed opportunity? The Reserve Bank of India's status quo on rates leaves traders balancing on a tightrope of cautious optimism and underlying anxiety. No surprises means no panic—just the usual background radiation of trade war threats.

Meanwhile, institutional investors keep playing musical chairs with risk assets. (Spoiler: everyone's still avoiding the 'stagflation' seat.)

The real question? Whether this calm is the eye of the storm—or just another case of markets pricing in dysfunction as 'the new normal'. After all, what's modern finance without a healthy dose of cognitive dissonance?

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The RBI’s Monetary Policy Committee maintained the repo rate at 5.5 per cent and retained its neutral policy stance, a decision widely anticipated by market participants. Governor Sanjay Malhotra expressed confidence in India’s growth outlook while flagging concerns about uneven economic expansion and potential retail inflation risks. The central bank revised its FY26 CPI forecast to 3.7 per cent from 4 per cent, following retail inflation dropping to a six-year low of 2.1 per cent in June.

Asian Paints led the Nifty gainers with a 2.64 per cent jump to ₹2,501.10, followed by HDFC Life which ROSE 1.84 per cent to ₹752.10. Trent advanced 1.37 per cent to ₹5,390.50, while Bharat Electronics gained 0.98 per cent to ₹390.45 and Titan increased 0.90 per cent to ₹3,448.90.

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On the downside, Wipro declined 1.56 per cent to ₹242.08, continuing the weakness in IT stocks observed since morning. Dr Reddy’s Laboratories fell 1.50 per cent to ₹1,196.60, while Bajaj Finance dropped 1.41 per cent to ₹879.30. Jio Financial Services declined 1.38 per cent to ₹328.25 and Nestle India decreased 1.35 per cent to ₹2,236.70.

Broader market indices underperformed benchmark indices, with the Nifty Midcap 100 falling 0.63 per cent to 56,841.40 and the Nifty Next 50 declining 0.66 per cent to 66,323.65. The Nifty Bank index managed marginal gains of 0.15 per cent to 55,442.75, while the Nifty Financial Services index remained flat with a 0.02 per cent increase to 26,378.35.

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Market breadth remained negative with 2,636 stocks declining against 1,274 advances on the BSE. A total of 98 stocks hit 52-week highs while 116 touched 52-week lows. Additionally, 191 stocks were locked in upper circuits compared to 233 in lower circuits.

Santosh Meena, Head of Research at Swastika Investmart, termed the RBI policy decision a non-event for markets, noting that focus WOULD now shift to US tariff impacts, upcoming US economic data, and foreign institutional investor flows. The cautious policy approach reflects concerns over global trade uncertainties, particularly the US’s 25 per cent tariffs on Indian exports announced by President Trump.

Binod Kumar, MD & CEO of Indian Bank, welcomed the status quo decision while noting that it leaves room for reconsideration in coming months as CPI remains benign and growth may require support.

Published on August 6, 2025

• Asian Paints Ltd
• HDFC Life Insurance Company Ltd
• Wipro Ltd
• Dr Reddys Laboratories Ltd
• Bajaj Finance Ltd
• Nestle India Ltd