India’s Nifty Logs Highest Close of 2025 as RBI’s Policy Support, Trade Optimism Drive Rally

Market Cheers RBI's Steady Hand and Global Tailwinds

India’s benchmark equity index Nifty 50 recorded its highest close of 2025 on Monday, riding on a wave of investor optimism spurred by the Reserve Bank of India’s (RBI) dovish tone in its latest monetary policy meeting and buoyant global cues. The Nifty closed at 25,045.10, up 187.90 points or 0.76%, while the Sensex climbed 646.67 points to settle at 82,465.52.

The rally was broad-based, with sectors such as banking, IT, auto, and consumer durables witnessing strong buying interest. Improved global risk sentiment, expectations of stable interest rates, and easing inflationary pressures contributed to the bullish momentum.

RBI Maintains Status Quo, Signals Supportive Stance

In its June policy announcement, the RBI’s Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.50%, for the eighth consecutive meeting, but struck a reassuring tone by emphasizing its commitment to supporting growth while keeping inflation under check.

RBI Governor Shaktikanta Das stated, “The Indian economy continues to exhibit strong fundamentals, and the current policy stance remains appropriate. We remain vigilant of evolving global and domestic conditions and are prepared to act as needed.”

This balanced messaging buoyed market sentiment, with traders interpreting it as a green signal for continued economic expansion without the immediate threat of tightening liquidity conditions.

Global Trade Optimism Adds Fuel

Apart from domestic cues, the Indian equity market also took comfort from positive developments on the global trade front. The United States and China resumed high-level trade negotiations, while Europe’s economic recovery showed encouraging signs with strong manufacturing and export data.

“India is strategically placed to benefit from a possible rebound in global trade, especially in electronics, pharma, and textiles,” said Priyanka Mehta, Head of Research at Axis Securities. “Foreign Institutional Investors (FIIs) are also showing renewed interest as global uncertainties begin to fade.”

Foreign inflows totaled ₹2,853 crore in Monday’s session, marking one of the strongest single-day FII purchases in recent months.

Sectoral Rally and Stock Highlights

All major Nifty sectoral indices ended in the green. The Nifty Bank surged 1.2%, led by gains in ICICI Bank, HDFC Bank, and Axis Bank. The Nifty IT climbed 0.8% amid signs of recovery in tech spending in the US. Consumer durables and auto stocks also contributed, reflecting improving domestic consumption trends.

Top gainers on the Nifty included:

• Titan Company (+3.6%) – Boosted by strong summer jewelry sales

• Mahindra & Mahindra (+3.1%) – On upbeat rural outlook and new SUV demand

• L&T (+2.8%) – On continued infrastructure push from the government

Meanwhile, defensive sectors like FMCG and Pharma saw modest gains, reflecting a balanced risk appetite among investors.

Analyst Views: "Confidence Returning to the Markets"

Market experts viewed the Nifty’s record close as a reflection of growing investor confidence in India's medium-term growth story.

Ajay Bagga, market veteran and former fund manager, commented, “The RBI has provided just the right mix of caution and support. The market now sees a clear runway for earnings growth in the next two quarters.”

Ritika Shah, equity strategist at JM Financial, added, “The recent FPI flows, improving macros, and the relatively calm geopolitical backdrop are acting as powerful tailwinds. This rally could sustain as long as inflation remains under control and crude oil doesn't spike unexpectedly.”

Economic Indicators Back the Rally

India's latest macro indicators are also painting a favorable picture. The Consumer Price Index (CPI) inflation eased to 4.4% in May, comfortably within the RBI’s upper tolerance limit of 6%. At the same time, GST collections remained above ₹1.8 lakh crore for the third straight month, reflecting robust demand and compliance.

The IMF recently upgraded India’s GDP growth forecast for FY26 to 6.9%, citing strong domestic consumption and improved investment activity, especially in the infrastructure and digital sectors.

Investor Outlook: What’s Next?

With the Nifty breaching the psychological 25,000 mark, investors are now eyeing the upcoming corporate earnings season and global central bank meetings for further cues.

While some experts urge caution citing high valuations, others believe India’s structural story remains intact. “We may see bouts of profit booking, but dips are likely to be bought aggressively,” said Kunal Bothra, independent market analyst.

Retail participation remains strong, with mutual fund SIP inflows crossing ₹19,000 crore in May—an all-time high.

India’s stock market has kicked off the second half of 2025 on a high note, driven by a blend of supportive monetary policy, easing inflation, and optimism over global trade. While external shocks and geopolitical risks remain on the radar, the overall sentiment appears constructive.

As the Nifty scales new highs, investors and analysts alike are hopeful that India’s economic fundamentals and policy clarity will keep fueling the market’s upward trajectory in the months to come.