Rate sensitive shares trade mixed as RBI cuts repo rate by 25 bps to 6.25%

State Bank of India (SBI), Bank of Baroda, Axis Bank, Punjab National Bank, Canara Bank and ICICI Bank from the Nifty Bank index were trading lower

RBI Monetary Policy: Shares of rate sensitive sectors like financials, including banks, non banking financial companies (NBFCs) and housing finance companies (HFs), along with automobiles, and realty were trading mixed after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) decided to cut repo rate by 25 basis points to 6.25 per cent from 6.5 per cent.

 

At 10:34 AM, the Nifty Bank, Nifty Financial Services, Nifty Private Bank, and Nifty PSU Bank indices were down between 0.45 per cent and 1.2 per cent. The Nifty Realty index, meanwhile, was down 0.52 per cent. On the other hand, the Nifty Auto index was almost flat, or down 0.03 per cent. In comparison, the Nifty 50 was down 0.33 per cent.

 

State Bank of India (SBI), Bank of Baroda, Axis Bank, Punjab National Bank, Canara Bank and ICICI Bank from the Nifty Bank index; and Brigade Enterprises, Prestige Estates, DLF, Sobha and Godrej Properties from the Nifty Realty index were down in the range of 1 per cent to 2 per cent. However, HDFC Bank, IndusInd Bank, Mahindra & Mahindra, Hero MotoCorp, and Bajaj Auto were trading higher by up to 1 per cent.

 

RBI, in its Monetary Policy statement, said the global economy is growing below the historical average even though high frequency indicators suggest resilience amidst continued expansion in world trade. The world economic landscape remains challenging with slower pace of disinflation, lingering geopolitical tensions and policy uncertainties. The strong dollar, inter alia, continues to strain emerging market currencies and enhance volatility in financial markets. 

 

"Looking ahead, healthy rabi prospects and an expected recovery in industrial activity should support economic growth in 2025-26. Among the key drivers on the demand side, household consumption is expected to remain robust aided by the tax relief in the Union Budget 2025-26. Fixed investment is expected to recover, supported by higher capacity utilisation levels, healthy balance sheets of financial institutions and corporates, and Government’s continued emphasis on capital expenditure," the RBI said in a statement.

 

That apart, food inflation pressures, absent any supply side shock, should see a significant softening due to good kharif production, winter-easing in vegetable prices and favourable rabi crop prospects. Core inflation is expected to rise but remain moderate. Continued uncertainty in global financial markets coupled with volatility in energy prices and adverse weather events presents upside risks to the inflation trajectory, it added.

 

According to analysts, the Reserve Bank of India’s decision to cut the repo rate by 25 basis points to 6.25 per cent reflects its focus on supporting economic growth amid moderating inflation. The move is expected to reduce borrowing costs, potentially improving credit availability and boosting demand across sectors.

 

"Alongside this, the central bank’s liquidity infusion measures aim to ensure stable financial conditions. However, challenges such as the weakening rupee, which could increase import costs, and external economic uncertainties remain key factors to monitor. The RBI will likely continue balancing growth and stability in its future policy decisions," said Anirudh Garg, partner and fund manager at Invasset PMS.