Sensex, Nifty struggle for direction; metals stocks surge on rate cut optimism; India VIX falls 3%

While Airtel soared on a profit beat, Bikaji Foods and Sonata Software tumbled after disappointing results.

In a choppy session, Sensex and Nifty seesawed between gains and losses on February 7. The turbulence came as the Reserve Bank of India (RBI) delivered a much-anticipated 25-basis-point rate cut—the first in nearly five years—to counter slowing economic momentum. The Monetary Policy Committee lowered the repo rate to 6.25 percent, in line with expectations, but the market’s response remained choppy.

At 12:06 PM, the Sensex was up 19 points or 0.02 percent at 78,077, and the Nifty was up 26 points or 0.1 percent at 23,630. About 1,512 shares advanced, 1,816 shares declined, and 133 shares were unchanged.

The rate cut comes on the heels of the government's move to reduce personal income tax, aimed at boosting consumption. "This decision follows the government's recent move to cut personal income tax to stimulate consumption. The rate cut, the first by the RBI in five years since May 2020, comes after maintaining the repo rate unchanged for two years. The announcement is made amid global economic uncertainty, with U.S. President Donald Trump imposing tariffs on Canada, Mexico, and China which has raised concerns over potential global trade wars, leading to a stronger dollar against major currencies," said Anil Rego, Founder and Fund Manager at Right Horizons.

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The real estate sector, a major beneficiary of lower interest rates, welcomed the move. "For the real estate market, lower borrowing costs are expected to boost demand for home loans, making housing more affordable and stimulating sector growth," said Shishir Baijal, Chairman and Managing Director of Knight Frank India. "This is a positive development for both homebuyers and developers, potentially leading to increased sales and new project launches. We hope interest rate cuts will be passed on to consumers and the home loan rates become more attractive which combined with the earlier announced tax incentives spur residential demand across the different price brackets, but especially in the below Rs 50 lakh category, which has seen continued weakening of demand."

NBFCs, traditionally more responsive to rate cuts, could also see a surge in credit demand. "Typically, NBFCs are better positioned to benefit from cuts in rates as credit growth will improve followed by banks. Also, credit-sensitive sectors like auto and real estate will see higher demand," he added.

Broader Market and Stock Movers

The broader market was split, with the BSE Midcap index rising 0.4 percent, while the BSE Smallcap index slipped 0.2 percent.

Sectorally, telecom, metal, and auto stocks lifted the Nifty, while FMCG, IT, and financials dragged it lower.

Nifty Metal index rose over 2 percent driven by optimism over increased infrastructure and real estate activity. A lower repo rate is widely seen as a boost for infrastructure and real estate growth, sectors that heavily depend on metals as key raw materials. This outlook sent metal stocks soaring. JSW Steel, Tata Steel, and Jindal Steel led the rally among Nifty Metal index components, climbing 2-4 percent.

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Among the top Nifty 50 performers, Bharti Airtel, Trent, Tata Steel, JSW Steel, and Adani Enterprises gained 2 to 5 percent. On the flip side, ONGC, ITC, SBI, TCS, and Britannia were the biggest losers, falling 1 to 2 percent.

Bharti Airtel surged nearly 5 percent after the telecom giant reported a higher quarterly profit, driven by a one-time gain and tariff hikes.

Bikaji Foods tumbled 11 percent after its December quarter results showed a steep 40 percent drop in net profit to Rs 27.77 crore. Sonata Software shares plunged 12 percent after the mid-tier IT firm delivered mixed Q3 results, beating revenue estimates but missing margin expectations.

From a technical standpoint, key support and resistance levels could dictate Nifty's next move. "After a positive opening, Nifty can find support at 23,550 followed by 23,500 and 23,400. On the higher side, 23,700 can be an immediate resistance, followed by 23,800 and 24,000," said Hardik Matalia, Derivative Analyst at Choice Broking.

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