Source: ZeeBusiness
Banking and other rate-sensitive stocks jumped on Friday, June 6 after the Reserve Bank of India (RBI) cut the repo rate by 50 basis points and reduced the Cash Reserve Ratio (CRR) by 100 basis points. This double monetary easing appreciated the Bank Nifty in intraday trading to an all-time high of 56,305, rising to more than 800 points from earlier declines.
Rate-sensitive sectors were able to garner the greatest gains led by the Nifty Realty index, which exhibited over a 4 per cent increase. Stocks such as DLF, Prestige Estates, Godrej Properties, Sobha, and Oberoi Realty powered the advance on hopes for lower home loans and rekindled housing demand.
Equally, the Nifty Auto index was also in the green, with 13 out of its 15 constituents up. Lower interest rates are expected to create improved retail demand for vehicles, thereby providing support to OEM margins and improved dealer sentiment.
Banking stocks were in the limelight, with the Bank Nifty establishing a new record. PSU banks had the edge with Punjab National Bank, Bank of Baroda and IDFC First Bank all logging strong gains. There were also investors looking at private players Axis Bank and ICICI Bank
"The CRR cut is a huge positive. By our estimates, it adds about 4-5 basis points to net interest margins (NIMs). While asset repricing will be quicker than deposits, the liquidity boost alone is a tailwind," said Rajiv Anand, Deputy Managing Director, Axis Bank.
This is the third time the central bank has lowered rates in 2025. This follows 25 basis point cuts in April and February, respectively, which means that the 50 basis point cut brings the repo rate down to 5.5 per cent. The RBI also changed its policy stance to "neutral" from "accommodative", suggesting some cautious optimism.
The CRR cut alone is expected to release around Rs 2.5 lakh crore of liquidity into the banking system - apart from decreasing the cost of funds, and developing credit flow.
The RBI may be in pause mode for a while, while it assesses the impact of the total 100 basis points of rate cuts since February. However, if it continued to evidence indicators of demand slowdown and global disinflation, we could expect further easing.
For the time being, analysts suggest that rate-sensitive sectors will remain in focus. A senior analyst in a domestic brokerage suggested, "Banking, housing finance and auto segments will continue to benefit from the RBI's accommodative move. The markets will track the monsoon's progress and any global cues for their direction."
With a supportive monetary policy and liquidity flush improving, momentum may continue to develop in banking, auto and realty counters. For now, the Street is happy.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
© Copyright 2025 . All Rights Reserved.
Privacy Policy