Mumbai, Feb 7 (IANS): The Indian stock market on Friday traded almost flat after the Reserve Bank of India (RBI) announced a 25 basis points (bps) cut in the repo rate.

The BSE Sensex was trading down by 112 points or 0.14 per cent at 77,945, while the Nifty was at 23,585 with 18.30 points or 0.08 per cent lower during the intra-day trade.

Both the indices showed little movement as gains in metal stocks were offset by declines in ITC Ltd, Reliance Industries Ltd, and some banking and financial stocks.

Nifty Metal rose more than 2 per cent after the RBI Governor stated that manufacturing activity in the country is at its peak.

This is the first rate cut by the central bank since May 2020. The decision was taken by the Monetary Policy Committee (MPC), led by the new RBI Governor, Sanjay Malhotra, who kept the policy stance ‘neutral.’

"The MPC noted that inflation has declined. Supported by a favourable outlook on food and continuing transmission of past monetary policy actions, it is expected to further moderate in 2025-26, gradually aligning with the target," Sanjay Malhotra, RBI Governor said.

The RBI has also forecast India's GDP growth rate at 6.7 per cent for the financial year 2025-26.

It expects the economy to grow at 6.7 per cent in the first quarter, 7 per cent in the second quarter, and 6.5 per cent in the third and fourth quarters.

The central bank noted that the risks to growth are evenly balanced.

According to a report by Nomura, a 5 per cent depreciation in the rupee could push up Consumer Price Index (CPI) inflation by 0.26 percentage points, core inflation by 0.10 percentage points, and GDP growth by 0.20 percentage points.

“However, due to weak global demand and slow domestic consumption, the impact of currency fluctuations on inflation and exports may be limited this time,” the report added.