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Stocks in rate-sensitive sectors reacted mixed to the Reserve Bank of India’s (RBI) decision to reduce the repo rate by 25 basis points to 6.25%
Auto, Realty Stocks Rejoice As RBI Cuts Interest Rates
RBI MPC Rate Cut: Stocks in rate-sensitive sectors reacted mixed to the Reserve Bank of India’s (RBI) decision to reduce the repo rate by 25 basis points to 6.25%—the first such cut in nearly five years.
Auto and real estate stocks saw positive movement, with gains of up to 3%, while banking and financial stocks experienced declines of nearly 1.5%.
In the auto sector, shares of Apollo Tyres, Ashok Leyland, M&M, and Samvardhana Motherson International rose by up to 3%. The realty sector also saw a boost, with Lodha, Godrej Properties, and Oberoi Realty gaining between 1% and 2.6%.
On the contrary, Nifty Bank index dropped more than 250 points, or 0.51%, to 50,127. The biggest decliners in the Nifty 50 were all from the financial sector: SBI, Axis Bank, and Bajaj Finance. ICICI Bank was the largest contributor to the decline, falling 1.1% to an intraday low of Rs 1,258.35.
In addition to the banks, the Nifty Financial Services Index also slipped by 0.55%, settling at 23,530.40, with most of its constituents trading in the red.
RBI Cuts Repo Rate to 6.25%
In its latest monetary policy meeting, the Reserve Bank of India (RBI) announced a 25 basis point reduction in the repo rate to 6.25%. RBI Governor Sanjay Malhotra confirmed that the policy stance remains ‘neutral.’
This is the first rate cut by the RBI since the pandemic period in May 2020. Between May 2020 and April 2022, the RBI kept the repo rate unchanged at 4%, before raising it gradually from April 2022 to 6.5% by February 2023, where it remained unchanged for two years until now.
The rate cut follows Finance Minister Nirmala Sitharaman’s announcement in Budget 2025-26, which provided the largest-ever tax relief to the middle class to spur consumption amid the economy’s slowest growth since the pandemic.
Along with the repo rate cut, the RBI reduced the SDF (standing deposit facility) to 6%, while the MSF (marginal standing facility) and Bank Rates were kept at 6.5%. The SDF represents the lower band of the interest rate corridor, and the MSF is the upper band.
The cash reserve ratio (CRR) remains at 4%, and the statutory liquidity ratio (SLR) stands at 18%.
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