WEEKLY WEALTH REPORT
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On December 5, 2025, the Reserve Bank of India (RBI) surprised markets by cutting the policy repo rate by 25 basis points to 5.25%, marking the fourth rate cut of 2025 and bringing cumulative easing to 125 basis points since February 2025.
While the 25 bps move was within consensus expectations, the aggressive tone and fresh liquidity injections signal RBI's commitment to supporting growth amid global uncertainties. The immediate market reaction was bullish, with Sensex surging 447 points and Nifty 50 jumping above 26,180, paring weekly losses and setting the stage for potential upside into year-end
The Rate Cut Decision
The Monetary Policy Committee voted unanimously to:
• Cut the repo rate from 5.5% to 5.25% (25 basis points), effective immediately.
• Lower the Standing Deposit Facility (SDF) rate to 5.0% and keep the Marginal Standing Facility (MSF) and bank rate at 5.5%.
• Maintain a neutral policy stance, leaving room for further cuts if growth or inflation data warrant.
What This Means for Equity Investors
Immediate Market Reaction
The rate cut was well-received by equities on December 5:
• Sensex jumped 447 points (0.52%), Nifty closed at 26,186 (0.35% gain), paring weekly declines.
• Interest-rate-sensitive sectors rallied: Nifty Auto , Nifty Realty and Nifty Financials posted strong gains, as lower borrowing costs improve affordability for consumers and profitability for real estate and auto
companies.
• Broader sentiment shifted to "buy on dips" as investors regained confidence after weeks of profit-taking.
Why Rate Cuts Boost Stocks (The Mechanism)
1. Lower Corporate Borrowing Costs: Reduced rates reduce the cost of capital, improving margins and enabling capex investments. Already profitable companies see earnings expand.
2. Enhanced Valuations: In discounted cash flow models, lower discount rates directly raise equity valuations. This supports re-rating of existing portfolios.
3. Increased Demand: Cheaper auto loans, home loans, and retail credit encourage consumer spending, boosting discretionary sectors (autos, FMCG, real estate).
The RBI easing cycle typically supports equities over 6–12 months; even if near-term volatility persists, entry points are becoming attractive.
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WEEKLY MARKET PULSE
This week Indian equities mostly consolidated near record highs, with frontline indices rallied by 1% due to Rate Cuts from RBI.
Sensex closed around 85,712–85,720 after a 400+ point RBI-day rally; Nifty 50 ended the week at 26,186 after touching an intraday high near 26,202.
Mid-cap and Small-cap indices under-performed: BSE Mid-Cap lightly down, Small-Cap ended in red
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) voted unanimously to reduce the repo rate by 25 basis points (bps) to 5.25%.
RBI projected India’s real gross domestic product (GDP) growth for fiscal 2026 at 7.3%, with Q3 at 7.0% and Q4 at 6.5%.
RBI Governor Sanjay Malhotra said the economy continues to display strong resilience, supported by robust domestic demand, healthy corporate and financial sector balance sheets, and a sharp decline in inflation.
Rate-sensitive spaces (PSU banks, private banks, autos, metals) led on expectations of lower borrowing costs after the RBI cut, while defensives like FMCG and pharma were mostly flat to slightly negative.
Best sectors for the week were PSU Bank, IT, Auto and Metal
Laggards were Realty, Media, Consumer Durable and FMCG
India and Russia inked key agreements on cooperation in the labour, energy, and health sectors.
PRODUCT OF THE WEEK
ICICI PRU FLEXI CAP FUND
Why to Invest in ICICI Flexi Cap Fund?
ICICI Flexi Fund is intended to invest in high-conviction ideas across market cap. This fund is primarily exposed to consumer-oriented companies especially in Autos, Hospitals, Realty, Retail lending, and
other Consumer discretionary.
The fund also has a good blend of B2B-oriented sectors like Auto Ancillaries and mid cap IT, although we have trimmed our significant overweight to the IT sector
While from a valuation perspective, ICICI Flexi cap may favour large cap over mid/small cap currently, given the bottom-up approach to stock selection, the fund will look for opportunities irrespective of the
market cap segment
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DISCLAIMER
Mutual Funds and Stock Market Investments are subject to market risks, pls read all scheme related documents carefully. Past performance of the mutual fund is not necessarily indicative for future performances. Mutual fund does not guarantee any returns or dividends.
This report is for informational purpose only and contains information, opinion, material obtained from reliable sources and every effort has been made to avoid errors and omissions and is not to be construed as an advice or an offer to act on views expressed therein or an offer to buy and/or sell any securities or related financial instruments, we shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means are prohibited.