Indian equities closed modestly lower on Friday after the Reserve Bank of India retained interest rates but lowered its economic growth forecast and raised its inflation projection, prompting investors to reassess the outlook for corporate earnings and economic activity.
While the RBI's decision to keep the repo rate unchanged at 5.25 percent was widely expected, markets reacted cautiously to the central bank's warning that prolonged tensions in West Asia, higher energy prices and global supply-chain disruptions could pose risks to both growth and inflation.
The RBI reduced its FY27 GDP growth forecast to 6.6 percent from 6.9 percent and raised its inflation estimate to 5.1 percent from 4.6 percent. Governor Sanjay Malhotra said monetary policy had become more cautious amid increasing global uncertainties.
However, measures announced by the RBI and the Centre to attract foreign capital and support the rupee helped limit losses. The government exempted foreign institutional investors from capital gains tax on interest earned from government securities, while the RBI expanded the range of sovereign bonds available under its unrestricted foreign investment route.
The Sensex ended 117 points, or 0.16 percent, lower at 74,243, while the Nifty 50 fell 49.85 points, or 0.21 percent, to close at 23,366.70.
According to market analysts, the RBI's policy measures supported the rupee, but the downgrade in growth projections and a higher inflation outlook triggered profit booking as investors reassessed near-term demand and earnings prospects.
Among Nifty 50 stocks, Adani Enterprises gained 2.36 percent to emerge as the top performer, aided by reports of a block deal. Hindustan Unilever rose 2 percent, while Adani Ports, Bajaj Finance, Axis Bank and Dr Reddy's Laboratories advanced between 1.2 percent and 1.7 percent.
Wipro fell 3.07 percent after turning ex-record date for its ₹15,000-crore share buyback. Hindalco, Trent, TCS, Coal India and Tata Steel also ended lower, declining by up to 3 percent.
The Nifty IT index declined 0.99 percent, while the metal index dropped 1.6 percent. In contrast, the Nifty Media index climbed 3.48 percent, extending its recent rally.
Rate-sensitive sectors such as banking, automobiles and real estate posted modest gains after the RBI maintained the status quo on interest rates.
Vodafone Idea was the most traded stock by volume, with 68.55 crore shares changing hands during the session. Ola Electric followed with 23.26 crore shares traded, while Zee Entertainment recorded volumes of 23.02 crore shares amid investor interest following its partnership with FIFA to broadcast the 2026 World Cup in India. GTL Infrastructure and YES Bank were also among the most actively traded counters.
