Auto, realty, bank stocks gain after RBI MPC cuts repo rate by 25 bps

At 10:25 AM; Nifty Realty and Nifty PSU Bank index were up 1 per cent each, while, Nifty Auto, Nifty Bank and Nifty Financial Services index up in the range of 0.30 per cent to 0.60 per cent.

Shares of rate sensitive companies were trading firm, with financials leading the chart by gaining up to 2 per cent after the Reserve Bank of India's (RBIs) Monetary Policy Committee (MPC) on Friday unanimously reduced the repo rate by 25 basis points to 5.25 per cent with immediate effect. The MPC maintained its stance as 'neutral.'

 

At 10:25 AM; the Nifty Realty and Nifty PSU Bank indices were up 1 per cent each, while the Nifty Auto, Nifty Bank and Nifty Financial Services indices gained in the range of 0.30 per cent to 0.60 per cent. In comparison, the Nifty 50 was up 0.21 per cent.

 

 

SBI Cards and Payment Services, Shriram Finance, Cholamandalam Investment and Finance Company, Bajaj Finance, Bajaj Finserv and Muthoot Finance from the Nifty Financial Services index rallied up to 2 per cent on the NSE in intra-day trade.

 

State Bank of India, Indian Bank, Punjab National Bank, Canara Bank and Bank of India from public sector banks and Prestige Estate Projects, DLF and Oberoi Realty from real estate were up in the range of 1 per cent to 2 per cent.

 

In view of the evolving liquidity conditions and the outlook, the Reserve Bank has decided to conduct OMO purchases of government securities of ₹1 trillion and a 3-year USD/INR Buy Sell swap of $5 billion this month to inject durable liquidity into the system.

 

Meanwhile, RBI Governor Sanjay Malhotra in statement said that both headline and core inflation is expected to be at or below the 4 per cent target during the first half of 2026-27. CLICK HERE FOR FULL STATEMENT

 

Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited said the MPC decided to vote in favour of growth despite ongoing robust growth in the economy. The unanimous nature of the decision in cutting rates by 25 bp reflects the consensus in the MPC that giving further boost to growth is a risk worth taking even in the context of depreciating rupee.    

The projection of 7.3 per cent GDP growth for FY 26 is positive for the market. Banks will like the policy decision overall but are unlikely to respond very positively to the rate cut since their NIMs will come under pressure and they will face difficulties in mobilising deposits if deposit rates are lowered. However, rate sensitives like autos and real estate stand to gain from the rate cut, said Dr. VK Vijayakumar.

 

By cutting the repo rate to 5.25 per cent while maintaining a neutral stance, the RBI has aligned monetary conditions with the evolving disinflation trend, while also acknowledging the need to counterbalance rupee pressures via liquidity support. The OMO purchase guidance and potential FX swaps further underline the RBI’s intent to ensure orderly financial conditions amid global uncertainties, said Anil Rego, Founder and Fund Manager at Right Horizons PMS.

 

Going ahead, the transmission of easing will matter more than the magnitude. Lower borrowing costs can gradually strengthen capex intentions, revive sentiment-sensitive segments such as housing, support credit flows to MSMEs, and improve working capital conditions across industries. For markets, the policy framework reduces tail risks around liquidity tightening, and creates a constructive environment for duration strategies in fixed income. Overall, the central bank has struck the right equilibrium between growth nurturing and macro prudential vigilance. If inflation stays passively anchored and external flows stabilise, this decision could help prolong the current domestic growth cycle into FY27, with financial conditions becoming incrementally more supportive, said Anil Rego.