Rate-sensitive sectors such as banks, autos, and realty surged on Friday after the Reserve Bank of India (RBI) announced a 50 basis points cut in the repo rate and a 100 basis points cut in the cash reserve ratio (CRR). The central bank also shifted its policy stance from ‘accommodative’ to ‘neutral’.
Post the announcement, the Bank Nifty climbed 1.3% to hit a record high of 56,515, led by strong gains in key banking stocks. IDFC First Bank rallied 5%, Axis Bank gained 2.6%, Kotak Mahindra Bank rose 1.8%, and HDFC Bank added 1.5%. Shares of PNB, Bank of Baroda, and IndusInd Bank were also up over 1% each.
In the financial services space, HDFC AMC surged over 5%, while Bajaj Finance, Shriram Finance, SBI Card, and Cholamandalam Finance advanced between 3–4%.
"The higher-than-expected 50bp rate cut decision by the MPC, though positive for growth is slightly negative from the market perspective for the near-term. This big rate cut is, as the RBI Governor remarked, front-loading of the rate cut. The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. This big rate cut will impact the margins of the banks and, therefore, bank stocks will be under pressure in the near-term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Meanwhile, the Nifty Realty index surged nearly 3%, led by a 5% rally in Godrej Properties. DLF jumped 4.4%, followed by gains in Prestige Estates, Sobha, Oberoi Realty, Brigade Enterprises, Anant Raj, and Lodha, which rose between 1–3%.
The Nifty Auto index was also up 1.15%, supported by buying in stocks like Ashok Leyland, Hero MotoCorp, and Maruti Suzuki, which rose up to 3.3%.
This is RBI’s third consecutive interest rate cut. Easing inflation has created room for the central bank to prioritise economic growth.
Vinit Bolinjkar- Head of Research, Ventura, said, "This move brings major relief to borrowers, with EMIs set to drop further following a cumulative 100 bps cut since February. The MPC also shifted its stance to neutral and announced a staggered 100 bps CRR cut to 3%. These measures offer timely support to the economy and markets amid global uncertainties."
Post the announcement, the Bank Nifty climbed 1.3% to hit a record high of 56,515, led by strong gains in key banking stocks. IDFC First Bank rallied 5%, Axis Bank gained 2.6%, Kotak Mahindra Bank rose 1.8%, and HDFC Bank added 1.5%. Shares of PNB, Bank of Baroda, and IndusInd Bank were also up over 1% each.
In the financial services space, HDFC AMC surged over 5%, while Bajaj Finance, Shriram Finance, SBI Card, and Cholamandalam Finance advanced between 3–4%.
"The higher-than-expected 50bp rate cut decision by the MPC, though positive for growth is slightly negative from the market perspective for the near-term. This big rate cut is, as the RBI Governor remarked, front-loading of the rate cut. The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. This big rate cut will impact the margins of the banks and, therefore, bank stocks will be under pressure in the near-term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Meanwhile, the Nifty Realty index surged nearly 3%, led by a 5% rally in Godrej Properties. DLF jumped 4.4%, followed by gains in Prestige Estates, Sobha, Oberoi Realty, Brigade Enterprises, Anant Raj, and Lodha, which rose between 1–3%.
The Nifty Auto index was also up 1.15%, supported by buying in stocks like Ashok Leyland, Hero MotoCorp, and Maruti Suzuki, which rose up to 3.3%.
This is RBI’s third consecutive interest rate cut. Easing inflation has created room for the central bank to prioritise economic growth.
Vinit Bolinjkar- Head of Research, Ventura, said, "This move brings major relief to borrowers, with EMIs set to drop further following a cumulative 100 bps cut since February. The MPC also shifted its stance to neutral and announced a staggered 100 bps CRR cut to 3%. These measures offer timely support to the economy and markets amid global uncertainties."
