Indian Stock Market Declines Despite RBI's Repo Rate Pause

The Indian stock markets faced a downturn on Friday, closing lower despite the Reserve Bank of India's decision to pause the repo rate. The Sensex and Nifty both recorded declines, while the rupee showed signs of recovery. Various sectors experienced mixed performances, with Media gaining significantly. Market experts weigh in on the implications of the RBI's decisions and the outlook for investors amid ongoing economic challenges. Stay tuned for more insights on market trends and forecasts.

By Narendra Chaudhary Jun 5, 2026, 16:16 IST

Market Overview

On Friday, the Indian stock markets closed lower, despite the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) decision to maintain the repo rate, which provided some relief to borrowers amid ongoing volatility linked to the Iran conflict. The Sensex finished at 74,243, down by 117 points or 0.16%, while the Nifty concluded at 23,366.70, a decrease of 49.85 points or 0.21%. In contrast, the Indian rupee showed a notable recovery, appreciating by 85 paise to close at 94.94 against the US dollar.

Among various sectors, the Media sector stood out with a nearly 3% increase, while indices for PSU Banks, Realty, Consumer Durables, and Healthcare also saw gains. Conversely, sectors such as Energy, IT, Metal, Oil & Gas, and Telecom experienced declines ranging from 0.5% to 1%.

Notable gainers included Adani Enterprises, Hindustan Unilever, Adani Ports, and Bajaj Finance, whereas Hindalco Industries, Wipro, Trent, Coal India, and Tata Steel were among the losers.

Ankur Punj, Managing Director & Business Head at Equirus Wealth, commented, "Although the markets faced losses, key indices managed to recover significantly due to selective buying in banking and telecom stocks. Investor sentiment remains cautious due to the currency's sharp depreciation and subsequent foreign institutional investor (FII) outflows. The upcoming monetary policy announcement later this week and the RBI's economic and inflation outlook will be closely monitored, especially given the weak monsoon predictions."

Vinod Nair, Head of Research at Geojit Investments Limited, noted, "Domestic equities ended the day flat as the monetary policy results met expectations, and the supportive measures from the RBI governor bolstered the rupee. However, the downward revision in growth forecasts and a cautious inflation outlook led to profit-taking as investors reassessed short-term demand and earnings potential. While the currency's gains may boost sentiment temporarily, inflationary pressures and a strong bond-yield environment are likely to impact both foreign and domestic investments."