It was a third straight interest rate cut by the RBI so far in 2019. Repo rate is the rate at which the RBI lends money to the commercial banks, in case of any shortfall of funds.
At 12:41 pm, Nifty Bank, Nifty Private Bank, Nifty Realty and Nifty Auto indices were all trading lower, in line with a per cent decline in the benchmark Nifty50 index. Nifty PSU Bank index slipped 2.5 per cent on the National Stock Exchange (NSE).
IndusInd Bank, IDFC First Bank, Bank of Baroda, Syndicate Bank, Allahabad Bank, Union Bank of India, Bank of India and YES Bank were down 3 to 5 per cent. Godrej Properties, DLF and Sobha in the realty pack and MRF, Mahindra & Mahindra (M&M), Ashok Leyland and TVS Motor Company among the automobiles pack were down 1 to 2 per cent on the NSE.
Since April 4 -- when the RBI first cut the repo rate in FY20 -- till Tuesday, the Nifty Bank and Nifty Realty index outperformed the market by gaining 6 per cent and 5 per cent respectively, against a 4 per cent rise in the 50-share index. Nifty Auto and Nifty PSU Bank index were down 3 per cent and 1 per cent, respectively, during the same period.
The central bank has also lowered its GDP growth forecast for the economy for 2019-20 from 7.2 per cent to 7 per cent. Weak global demand due to escalation in trade wars, the RBI feels, may further impact India’s exports and investment activity.
"Private consumption, especially in rural areas, has weakened in recent months. However, on the positive side, political stability, high capacity utilisation, the uptick in business expectations in Q2, buoyant stock market conditions and higher financial flows to the commercial sector augur well for investment activity," the RBI said in a statement.
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