Stock Market Outlook Today, 5 December: Sensex, Nifty Likely to Stay Volatile Amid RBI Repo Rate Cut Decision

Indian equity markets are expected to trade with heightened volatility on December 5 as investors await the Reserve Bank of India's Monetary Policy Committee (MPC) outcome. After snapping a four-day losing streak on December 4, the Sensex and Nifty may see limited upside until clarity emerges on interest rates, liquidity stance, and the central bank's forward guidance.

Stock Market Outlook Today, 5 December 2025 Amid Key RBI Policy Announcement on Repo Rate Cut

On December 4, benchmark indices staged a mild recovery, reclaiming the 26,000 mark after several sessions of correction. The Sensex ended 158.51 points higher at 85,265.32, while the Nifty rose 47.75 points to close at 26,033.75. However, broader markets remained muted as both Midcap and Small-cap indices closed nearly flat.

Stocks in Focus Today: IT, Defence Stocks To Watch

Sectoral performance was mixed, with IT stocks leading gains. "Amongst sectors, Nifty IT index emerged as the top gainer, rising 1.4%, buoyed by buying interest in select technology stocks amid INR depreciation vs USD and optimism over potential rate cut by the US Fed," said Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd.

He added that defence stocks also saw renewed interest, with the Nifty India Defence index gaining 1% amid Russian President Vladimir Putin's visit to India for the 23rd India-Russia Annual Summit. Meanwhile, the rupee continued its downward trend, hitting a fresh all-time low of Rs 90.42 per dollar due to persistent FII outflows and widening trade deficit.

RBI Policy in Focus: Repo Rate Cut Expectations Supporting Sentiment

Investor attention is now firmly fixed on the RBI MPC outcome scheduled for today. Market participants are pricing in the possibility of a 25-bps rate cut, which could act as a short-term catalyst for rate-sensitive sectors such as banking, realty, and auto.

According to Bajaj Broking Research, "Benchmark indices edged higher on December 4, reclaiming the 26,000 mark and snapping a four-session losing streak, even as volatility persisted ahead of the RBI policy announcement." The brokerage noted that while IT was the top performer, "Media was the biggest drag, falling 1.45%," and other sectors witnessed modest movements.

Nifty Prediction Today for December 5, 2025

Nifty's near-term setup suggests consolidation with a positive bias. Bajaj Broking Research highlighted that the index is finding strong buying interest at key support levels.

"The index formed a small bullish candle with a higher high and higher low signaling consolidation with positive bias. Buying demand is seen emerged in the last two sessions from the lower end of the two-month rising channel," the brokerage said.

It added that volatility is likely to remain high due to the RBI announcement, but the broader trend remains robust. "We believe the current 3-4 sessions breather should be used to accumulate quality stocks in a staggered manner for the next leg of up move towards 26,500 levels in the coming week."

Key support for Nifty is placed at 25,900-25,700, aligning with the 50-day EMA, the rising channel's lower band, and the bullish gap created on November 12.

Bank Nifty Outlook Today: Range-Bound But Positive Bias

Bank Nifty is likely to consolidate within a defined range until policy clarity emerges. Bajaj Broking Research noted that the index is forming a base ahead of the event.

"Bank Nifty has formed a doji candle with long shadows in either direction signaling consolidation ahead of the RBI monetary policy outcome. We expect the index to consolidate and form a base in the range of 58,500-60,100 in the coming sessions," the brokerage stated.

A breakout above 60,114 could trigger further upside toward 60,400 and 61,000. The report emphasised that the broader structure remains strong; "The entire up move of the last 2 months is well channelled signaling sustained demand at elevated levels. Key support is placed at 58,300-58,600, and holding above this will keep the short-term bias positive."

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