Rate-sensitive stocks surge as RBI delivers 50-bps cut 

Rate-sensitive sectors rallied sharply on Friday following the Reserve Bank of India’s decision to cut the repo rate by 50 basis points to 5.50 per cent. The Nifty Realty index led the gains, closing 4.68 per cent higher at 1,039.60, while the Nifty Auto and Nifty Financial Services indices advanced 1.52 per cent and 1.75 per cent respectively to end at 23,661.30 and 26,848.90.

Real estate stocks dominated the gainers’ list with Godrej Properties jumping 6.75 per cent, followed by Oberoi Realty (6.56 per cent) and DLF (6.55 per cent). All ten realty stocks in the index posted gains, with even Raymond managing a marginal 0.09 per cent advance.

Financial services companies also responded positively to the rate cut, with ICICI General Insurance surging 7.46 per cent and Muthoot Finance gaining 6.98 per cent. Among major banks, Axis Bank rose 3.15 per cent while HDFC Bank gained 1.46 per cent. However, HDFC Life declined 0.87 per cent.

The auto sector showed mixed performance despite overall index gains. Ashok Leyland led with a 3.57 per cent jump, while Maruti Suzuki gained 2.78 per cent. However, MRF and Tube Investments declined 0.43 per cent and 0.69 per cent respectively.

Industry executives welcomed the monetary policy decision, viewing it as a catalyst for increased demand and improved affordability. Tribhuwan Adhikari, MD & CEO of LIC Housing Finance, called the rate cut “a bold move” that would significantly lower borrowing costs and improve affordability for homebuyers across segments.

Manan Shah of MICL Group described the move as “not merely a reduction in borrowing costs” but “a catalyst for renewed buoyancy, capital deployment, and project acceleration” for real estate and infrastructure sectors.

Nitin Bavisi, CFO of Ajmera Realty & Infra India Ltd, said the rate cut “comes at a timely moment” and would make homes more affordable while boosting demand in the real estate sector. He noted that lower interest rates would provide relief on working capital pressures for developers and enhance balance sheet quality.

Sudipta Roy, Managing Director & CEO of L&T Finance Ltd, described the policy decisions as “an emphatic reassurance of policy focus on propelling economic growth” and said the “jumbo rate cuts and aggressive CRR cuts will clearly boost credit demand while infusing durable liquidity in the financial system.”

The RBI’s third consecutive rate cut comes amid easing inflation, which has fallen to 3.2 per cent and remains within the central bank’s 2-4 per cent target range. Financial sector executives expect the aggressive monetary easing to boost credit demand while infusing liquidity into the financial system.

Trading volumes remained robust across all three sectors, with financial services recording the highest turnover of ₹19,241.95 crore, followed by auto at ₹4,216.53 crore and realty at ₹4,134.82 crore.

Published on June 6, 2025