Mumbai: The Indian stock market witnessed a cautious session as the Reserve Bank of India (RBI) decided to hold the benchmark repo rate steady at 5.50%, leaving investors to navigate a complex blend of global jitters, tariff concerns, and domestic earnings season.
The benchmark Nifty50 slipped below the psychological 24,650 level, registering a decline of around 80 points, while the Sensex hovered below 80,700. The smallcap and midcap indices faced deeper cuts, with the Nifty Smallcap shedding close to 1% and the Nifty Midcap diving nearly 400 points signalling a cautious stance among retail and institutional investors alike.
Among individual stocks, Bajaj Holdings drew investor attention as it tumbled ahead of its financial results. While sentiment remained subdued, anticipation is high amid a busy earnings day that includes key names such as Bajaj Auto, Bharat Forge, Divi’s Laboratories, Trent, IRCON, PFC, and Pidilite, which is also set to consider a bonus issue on August 6.
Governor Malhotra’s post-MPC remarks offered a cautiously optimistic view: GDP projections remain intact at 6.5% for FY26, but downside risks linger, especially in light of uncertain global trade dynamics and Donald Trump’s renewed tariff rhetoric. Inflation, especially core inflation, remains a focal point for the central bank. CPI is expected to tick above 4% in the later quarters, with Q4 FY26 potentially hitting 4.4%.
Economists from Kotak Mahindra and Deutsche Bank both concurred that while room exists for a 25 bps cut later in the year possibly in October the RBI is likely to tread carefully, especially as the lagged impact of earlier rate cuts continues to filter through the economy.
From the banking side, SBI’s Ashwini Kumar Tewari noted that the pause offers breathing room: “Loan rates transmit quickly, while deposit repricing takes longer. So this pause eases pressure on our net interest margins.”
Kotak Mahindra’s Nilesh Shah added that markets are still divided some are expecting rate cuts, others are betting on stability. However, most agree the RBI is playing the long game and will act only when necessary.
Among the most traded names, Kirloskar Oil Engines saw volumes surge by nearly 14x, while Saregama and ITI traded with unusually high activity 13.37x and 6.91x, respectively. Other notable movers included Fluorochemicals and NCC, which also saw elevated trading interest.
Companies across sectors offered mixed outlooks. Prestige Group’s Irfan Razack reported strong real estate demand in Bengaluru and Mumbai, with upcoming projects worth ₹42,000 crore. Meanwhile, Pidilite signaled double-digit growth in its industrial and rural segments, and expects to maintain healthy margins between 21–24%.
In the defence sector, analysts remain bullish. Bharat Electronics, HAL, and Bharat Dynamics were highlighted as strong long-term bets amidst increasing government focus and fresh budgetary allocations.
Markets remain jittery as U.S.-India trade tensions simmer. While investors hope “cooler heads will prevail,” many see upside limitations if new tariffs materialize. This uncertainty has dampened momentum despite favorable domestic cues like strong forex reserves and improving service trade shares.
All eyes are now on the GDP figures due on August 29 and potential global policy shifts. Meanwhile, markets brace for a flood of corporate results and sector-specific announcements. With inflation expected to edge higher in Q4 and global winds blowing unpredictably, traders may need to buckle up for a volatile second half of 2025.