RBI’s liquidity boost lifts banking stocks while metals rally on steel import duty
April 22, 2025 turned out to be positive for the Indian stock market, with benchmark indices Sensex and Nifty 50 moving up. The upward movement was largely attributed to the recent liquidity-enhancing measures taken by the Reserve Bank of India (RBI), which bolstered sentiments of investors, especially in the banking sector.
Benchmark Indices Performance
BSE Sensex: Closed at 79,750.18, gaining 0.43%.
Nifty 50: Closed at 24,217.70, gaining 0.38%.
The indices had a strong opening, reflecting optimism in the wake of RBI’s policy adjustments.
Under RBI’s Liquid Measures Banking Sector Responds
RBI’s latest decision in favor of banks was to cut the buffer rate on digitally linked deposits to 2.5% against an earlier 3.0%. Consequently, the ‘run-off’ factor on wholesale deposits from non-financial entities was reduced to 40% from 100% earlier. This sparked a strong rally in banking stocks and is expected to give these banks a little respite in their funding and liquidity pressures.
Kotak Mahindra Bank: +2.3%
HDFC Bank: +2.1%
Contrarily, shares of IndusInd Bank declined by almost 4% on reports of a second forensic audit concerning ₹6 billion in interest income discrepancies.
Sectoral Highlights
Metals: Gained 1% after the government imposed a 12% safeguard duty on certain steel imports to curb cheap shipments into the country, notably from China.
Information Technology (IT): Marginally fell by 0.5%, after a big gain of more than 2% in the previous session.
Mid- and Small-Cap Indices: Both indices gained roughly 1.1%, exhibiting broad market participation in the rally.
Corporate Developments
360 One Wam: The shares rose 2% after announcing the buyout of UBS’s India wealth management business for $36 million. The transaction is expected to increase 360 Wam’s footprint in India’s wealth management sector.
Currency and Bond Markets
Indian Rupee: Flat at 85.13 against U.S.D.; balanced out between slight dollar inflows and the weakening Chinese yuan.
Yield on Government Bond of 10 Years: Increased marginally to 6.3365%, due to market adjusting its expectation to RBI’s newly deferred liquidity regulation.
Market Outlook
Analysts indicate that the breakout above crucial resistance at 24,100 on the Nifty 50 suggests the potential for an advance toward the 24,450–24,500 area in the near term. The index would find support at 23,850, and should it breach below, reversal indications would be provided.
Thus INR market showed its resilience on April 22, 2025, buoyed by RBI’s liquidity measures and positive corporate news. Investors are advised to keep an eye on sector-specific moves and global cues leading to their decision-making process in the forthcoming sessions.
