The Indian benchmark indices ended lower on Wednesday after the central bank's MPC announcement of keeping the repo rate unchanged at 5.25% as the Sensex rose over 152 points to settle at 78,581 and the Nifty increased 9.75 points to close trade at 24,624 at 3:30 PM.
Previously, during the early morning session, the Sensex soared more than 400 points and crossed 78,850, while the NSE Nifty50 stood nearly flat above 24,600, as of 9:15 AM.
The Reserve Bank of India (RBI) on Wednesday kept the benchmark repo rate unchanged at 5.25%, while maintaining its 'neutral' policy stance, as the Monetary Policy Committee (MPC) concluded its three-day meeting.
The MPC, chaired by RBI Governor Sanjay Malhotra, met from August 3 to August 5 for its third bi-monthly policy review of FY27.
Announcing the policy decision, RBI Governor Sanjay Malhotra said the Monetary Policy Committee unanimously voted to leave the policy repo rate unchanged at 5.25%.
The central bank also retained the Standing Deposit Facility (SDF) rate at 5%, while keeping the Marginal Standing Facility (MSF) rate and the bank rate unchanged at 5.5%.
The August policy review comes against the backdrop of a challenging macroeconomic environment, with the ongoing impact of the US-Iran conflict continuing to influence domestic growth and inflation.
"The re-escalation of the conflict since the first week of July has amplified volatility in energy prices. Early results of corporates for Q1 indicate healthy performance in the manufacturing sector. Private consumption continued to be driven by buoyant discretionary spending. Overall, the Indian economy performed better than expected in Q1," Malhotra said.
Global markets rallied after US Treasury Secretary Scott Bessent said Washington and Tehran could reach an agreement "as soon as Tuesday or Wednesday", raising hopes of a diplomatic resolution to the conflict in West Asia.
According to Bessent, a successful agreement could lead to the full reopening of the Strait of Hormuz, easing concerns over disruptions to global energy supplies.
The prospect of a breakthrough improved investor sentiment and supported gains across global equity markets.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the resilience of the Indian economy, improving corporate earnings and foreign institutional investors (FIIs) turning net buyers for the sixth consecutive session were positive factors for the market.
Asian markets also traded firmly higher, with South Korea's KOSPI surging 4%, Japan's Nikkei 225 advancing 3%, while Shanghai's SSE Composite and Hong Kong's Hang Seng were also in positive territory.
US markets had ended sharply higher on Tuesday.
Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said domestic sentiment has strengthened as foreign portfolio investors continue rebuilding positions in Indian equities after an extended period of outflows.
He added that the recent recovery in the rupee, supported by softer crude oil prices and improving global risk appetite, has further enhanced the attractiveness of Indian financial assets.
According to Radhakrishnan, although global uncertainties persist, investors are increasingly looking beyond near-term geopolitical risks and focusing on corporate earnings, liquidity conditions and domestic growth prospects.
