Nifty, Sensex Rise as RBI Cuts CRR; Banks, Auto Stocks Gain

On December 6, benchmark indices Nifty and Sensex traded modestly higher after the Reserve Bank of India (RBI) reduced the cash reserve ratio (CRR) by 50 basis points to 4%, which balanced out the Monetary Policy Committee's (MPC) decision to leave the repo rate unchanged. Consequently, HDFC Bank, ICICI Bank, and SBI rebounded to trade in positive territory.

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The RBI retained the repo rate at 6.5% for the 11th consecutive meeting and maintained a "neutral" monetary stance. RBI Governor Shaktikanta Das also revised the real GDP growth forecast for FY25, lowering it to 6.6% from 7.2%.

By 10:25 am IST, the Sensex had risen 82.73 points (0.10%) to 81,848.59, while the Nifty gained 9.95 points (0.04%) to reach 24,718.35. Market breadth was positive, with 2,070 stocks advancing, 1,134 declining, and 114 remaining unchanged.

"Markets are responding to the RBI MPC meeting," commented Ruchit Jain, Vice President of Technical Research at Motilal Oswal. "The CRR cut announced by Governor Das is a positive signal for the market. Additionally, the return of FIIs as net buyers is a significant boost. If this trend continues, large-cap stocks could attract more interest." He further noted that a dovish stance from the RBI would enhance market sentiment.

Sectorally, PSU Banks led the gains, climbing 0.7%, supported by the CRR reduction. Nifty Bank rose 0.2% as major players like HDFC Bank, SBI, and ICICI Bank recovered losses. Nifty Auto gained 0.4%, driven by advances in Bajaj Auto, M&M, and Eicher Motors. The FMCG index also posted gains, with ITC, Godrej Properties, Britannia Industries, and Varun Beverages opening higher.

On the flip side, Nifty IT slipped 0.4%, led by declines in TCS, Infosys, Wipro, and Tech Mahindra. Realty stocks also fell 0.5%, with losses in DLF and Godrej Properties. Despite this, the realty index has surged nearly 37% year-to-date, significantly outpacing Nifty's 13.6% gain over the same period.

Mid-cap and small-cap indices continued their 10-day streak of outperformance, rising 0.15% and 0.32%, respectively. However, Jain cautioned that this trend might not be sustainable as FII buying is expected to favor large-cap stocks. He also pointed out that domestic institutional investors (DIIs) have been net sellers for three consecutive sessions, which could pressure mid- and small-cap segments relative to frontline indices.

Canara Bank shares edged higher after receiving RBI approval to reduce its stakes in Canara Robeco Asset Management Company and Canara HSBC Life Insurance Company by 13% and 14.5%, respectively, via IPOs.

Aviation software provider Ramco Systems rallied 7% following a partnership with Hanjin Information Systems & Telecommunication Co (HIST), an ICT services subsidiary of Korea’s Hanjin Group. This collaboration aims to help aviation companies in Korea digitally transform their maintenance, engineering, and operations.

Garden Reach Shipbuilders & Engineers gained 2% in morning trade after signing a contract for the construction and delivery of the second vessel in a series of four additional 7,500 DWT multi-purpose ships in Germany. In September, the company secured an order for four similar vessels.

Hardik Matalia of Choice Broking noted, "Post a positive opening, Nifty may find support at 24,500, followed by 24,400 and 24,300. Resistance levels are projected at 24,800, 24,900, and 25,000." He added that Bank Nifty could find support at 53,400, 53,100, and 52,800, with resistance levels at 53,900, 54,200, and 54,400.

Top Nifty gainers included Bajaj Auto, Axis Bank, BPCL, Trent, and ITC. On the losing side were Cipla, Infosys, HDFC Life, Tata Motors, and UltraTech Cement.