Mumbai, Feb 7 (PTI) Benchmark indices Sensex and Nifty were trading in the positive territory on Friday after the RBI under new Governor Sanjay Malhotra cut interest rate for the first time in nearly five years.

The 30-share BSE benchmark Sensex traded 233.96 points higher at 78,290.08 in the late morning trade. The NSE Nifty quoted 83.40 points up at 23,686.75.

From the 30-share blue-chip pack, Bharti Airtel's stock surged nearly 5 per cent after the firm reported a more than five-fold jump in consolidated net profit to Rs 16,134.6 crore boosted by consolidation of the Indus Tower business and benefits of tariff hikes flowing into the quarter.

Tata Steel, NTPC, Mahindra & Mahindra and Zomato were the other gainers.

The stock of ITC declined nearly 2 per cent after the diversified entity reported a 7.27 per cent decline in consolidated net profit to Rs 5,013.16 crore for the December quarter on account of subdued demand and sharp escalation in input costs.

State Bank of India, Tata Consultancy Services, Nestle, ICICI Bank and PowerGrid were also among the laggards.

Interest rate sensitive realty and auto stocks were trading in the positive territory.

The RBI under new Governor Sanjay Malhotra on Friday cut interest rate for the first time in nearly five years as the central bank pivoted the policy stance to support a shuttering economy.

The 25 basis points rate cut to 6.25 per cent comes after last rate reduction in May 2020. The last revision of rates happened in February 2023 when the policy rate was hiked by 25 basis points to 6.5 per cent.

The Monetary Policy Committee (MPC) unanimously decided to slash policy rate by 25 basis points to 6.25 per cent, Malhotra said.

The interest rate cut comes within a week of Finance Minister Nirmala Sitharaman in Budget 2025-26 providing biggest ever tax break to the middle class to boost consumption after the economy has slowed to its lowest pace since the pandemic.

"In a landmark decision, the Reserve Bank of India (RBI)’s Monetary Policy Committee has reduced the benchmark interest rate by 25 basis points, the first cut in five years, aiming to stimulate economic growth while closely monitoring inflation. This move aligns with global central banks, which have been easing rates since last year to counter economic slowdowns.

"However, this decision is expected to widen the gap between US and Indian bond yields, potentially accelerating capital outflows from India. With US bond yields on an upward trajectory, the Indian Rupee (INR) is facing added depreciation pressure, exacerbating currency risks. Given these challenges, the rate cut could prove to be a balancing decision on currency stability and stimulating consumption," Umeshkumar Mehta, CIO, SAMCO Mutual Fund, said.

In Asian markets, Seoul and Tokyo were quoting lower while Hong Kong traded in the positive territory.

US markets ended mostly higher on Thursday.

"A rate cut that was widely anticipated and priced in was delivered by the RBI MPC. Policy rate reduction was clearly a question of timing in the current context considering the evolving situation on the currency led by global factors and capital flows," Rajeev Radhakrishnan, CIO - Fixed Income, SBI Mutual Fund, said.

Global oil benchmark Brent crude climbed 0.51 per cent to USD 74.68 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,549.95 crore on Thursday, according to exchange data.

On Thursday, the BSE bellwether gauge dropped 213.12 points or 0.27 per cent to settle at 78,058.16. The Nifty declined 92.95 points or 0.39 per cent to 23,603.35. PTI SUM DR

Policy rate cut aims to boost consumption but raises capital outflow and currency depreciation risks. The Reserve Bank of India's Monetary Policy Committee cut the policy rate by twenty five basis points to stimulate growth amid slowing activity, shifting policy to support consumption while monitoring inflation. Markets reacted with gains in benchmark indices and interest rate sensitive sectors; commentators warned of risks from a widening bond yield differential that could accelerate capital outflows and place depreciation pressure on the currency, underscoring a trade off between domestic stimulus and external stability.