The Indian stock market logged another lower session as initial optimism faded after the RBI left the benchmark interest rate unchanged on Wednesday, triggering a sell-off in rate-sensitive stocks and dragging benchmark indices down for the second straight day.
The Nifty 50 closed 0.27% lower at 24,582, while the S&P BSE Sensex slipped 0.10% to 80,632. Broader markets saw sharper declines, with the Nifty Midcap 100 tumbling 0.77% and the Nifty Smallcap 100 falling 1.10%.
Today’s decline was led by pharma stocks after Donald Trump said he would raise tariffs on pharmaceutical imports by over 250%. Rate-sensitive sectors such as autos, financials, and FMCG also ended the session lower.
As expected, the Indian central bank kept the policy repo rate unchanged at 5.5% and retained its ‘Neutral’ stance in the August MPC meeting, citing inflation stability and geopolitical uncertainty. This follows a cumulative 100 basis point rate cut earlier this year.
The pause came amid US President Donald Trump’s threat to impose higher tariffs on India due to New Delhi’s continued oil imports from Russia. On Tuesday, Trump said he would raise tariffs on India “very substantially over the next 24 hours,” adding that while India is set to offer the US “zero tariffs” under a trade deal, it would not be sufficient given its purchase of Russian oil.
Earlier on Monday, Trump had similarly warned of substantial tariff hikes, accusing India of buying “massive amounts of Russian oil” and selling it “on the open market for big profits.”
Meanwhile, RBI Governor Sanjay Malhotra indicated that the impact of potential tariffs from the Trump administration on India is difficult to predict.
In a post-press conference, Malhotra said: “On growth, you are very well aware that we had already reduced our forecast from 6.7% to 6.5%, so some of the global uncertainties have already been factored into the revised growth outlook.”
