The stock market gave a big thumbs-up to the Reserve Bank of India’s (RBI) latest policy move today (June 6). With the central bank cutting the repo rate by 50 basis points, the third such reduction this year, rate-sensitive sectors like auto and real estate raced ahead, clocking gains of up to 4%.
Both benchmark indices Sensex and Nifty which opened the day on a quiet note, saw a sharp upward move post the announcement. At the time of writing, the Sensex had jumped over 600 points to 82,067.34, while the Nifty Bank index surged more than 200 points, trading around 24,971.65.
“The higher-than-expected 50bp rate cut decision by the MPC, though positive for growth is slightly negative from the market perspective for the near-term. This big rate cut is, as the RBI Governor remarked, front-loading of the rate cut. The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. This big rate cut will impact the margins of the banks and, therefore, bank stocks will be under pressure in the near-term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Auto stocks in top gear on hopes of sales boost
The Nifty Auto index zoomed over 1% after the policy announcement, trading at 23,528.60. Lower interest rates typically make car and two-wheeler loans more affordable, which may boost demand.
Stocks such as Ashok Leyland rose nearly 3%, while Hero MotoCorp gained over 2%. Other notable gainers included Bajaj Auto, Motherson, and Bharat Forge, all of which were trading firmly in the green.
Real estate stocks surge on higher demand hopes
Homebuyers might have something to cheer for too. The Nifty Realty index surged over 3.5%, hitting 1,028 levels, as the rate cut is expected to lower home loan EMIs and revive housing demand.
“A rate cut, while widely anticipated in some quarters, comes as a welcome move for the real estate sector. Lower borrowing costs will positively influence affordability and purchasing decisions, particularly in the budget and mid-income segments. While luxury homebuyers are typically not driven by EMIs or interest rates, a softening monetary policy signals broader economic confidence. Overall, a rate cut acts as a confidence marker, even if its direct impact on the luxury segment is limited,” said Ramani Sastri, Chairman & MD, Sterling Developers
Among the top performers were Godrej Properties, DLF, Oberoi Realty, Prestige, and Sobha, with gains ranging between 4% and 5%. The only laggard in the pack was Raymond, which stayed in the red.
RBI delivers the third rate cut in 2025
The RBI’s Monetary Policy Committee (MPC) cut the repo rate, that is the key lending rate for commercial banks to 5.5% from 6%, a 50-bps cut.
According to the RBI, the Standing Deposit Facility (SDF) rate now stands at 5.25%, while the Marginal Standing Facility (MSF) and Bank Rate have been adjusted to 5.75%.
This is the third consecutive rate cut in 2025, bringing the total reduction this year to 100 basis points.