Indian shares fell on Wednesday, dragged by rate-sensitive stocks after the central bank held key rates and maintained a ‘neutral’ stance, disappointing expectations of a dovish tilt, while concerns over U.S. tariffs weighed on IT and pharma.
The Nifty 50 fell 0.31% to 24,574.20, while the BSE Sensex lost 0.21% to 80,543.99.
While reiterating that the domestic economic outlook remained “bright” despite global trade challenges, the RBI held rates steady, as expected, and retained its policy stance at “neutral” following a surprise 50-basis-point cut in June.
“Even with inflation at lower levels, RBI chose to remain watchful rather than supportive. That silence on future easing took the steam out of rate expectations,” said Nikunj Saraf, chief executive at Choice Wealth.
Fourteen of the 16 major sectors logged losses. Rate-sensitive sectors such as realty lost 1.5%, while consumer and auto indexes fell 0.9% and 0.5%, respectively. High-weight financials were little changed.
Amid U.S. tariff-related growth concerns, the RBI stuck to a cautious stance which is likely its best option, three analysts said.
Metal, IT stocks drive Indian stock benchmarks higher
“The RBI appears acutely aware that the downside risks to growth from U.S. tariff spillovers are not yet fully priced in,” said Arsh Mogre, economist at PL Capital.
U.S. President Donald Trump said on Tuesday he would raise tariffs on Indian imports from the current rate of 25% “very substantially” within 24 hours over continued Russian oil purchases.
IT and pharma stocks, which derive a significant share of revenue from the U.S., fell 1.7% and 2%, respectively.
The broader small-cap and mid-cap indexes fell 1.1% and 0.8%, underperforming the benchmarks due to their higher exposure to the domestic economy and borrowing costs.
Among individual stocks, biscuit maker Britannia lost 4.1% after quarterly profit miss while Bharti Airtel’s unit Bharti Hexacom lost 2.8% on weaker earnings.
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