RBI Slashes Repo Rate by 50 bps; Nifty, Sensex Jump Led by Realty and Financials

Indian equity markets witnessed a powerful rebound on June 6, led by a surprise move from the Reserve Bank of India (RBI), which slashed the repo rate by 50 basis points to 5.50% and shifted its policy stance to ‘neutral.’ The BSE Sensex jumped 723.71 points to close at 82,165.75, while the NSE Nifty surged 234.65 points to settle at 24,985.55, just shy of the 25,000 mark.

This sharp uptrend came after a lackluster opening as traders absorbed the morning’s policy signals. The RBI’s aggressive monetary action signaled a strong commitment to economic growth amid global uncertainties, prompting a swift rotation of capital into rate-sensitive sectors like real estate, financial services, auto, and consumer goods. The Nifty Bank index gained 1.49% to touch 56,593.25, registering a fresh record high.

Highlights:

• Sensex gains 723 points, Nifty nears 25,000 after RBI’s unexpected rate cut.

• Nifty Bank index surges to all-time high; broader indices also end higher.

• Market breadth positive with gains across realty, banks, autos, and FMCG sectors.

RBI Delivers Larger-Than-Expected Monetary Stimulus

The 50-bps repo rate cut took markets and analysts by surprise, as consensus estimates had pointed to a more conservative reduction of 25 bps. This third rate cut in 2025, following two earlier reductions of 25 bps each, underscores the central bank’s urgency in addressing slowing private investment and muted global trade. The cash reserve ratio (CRR) was also reduced by 100 basis points to further enhance liquidity in the banking system.

RBI’s move is seen as a proactive measure to support lending, reduce the cost of borrowing, and incentivize credit demand. Governor Sanjay Malhotra indicated the central bank remains watchful of global volatility but is confident in India’s domestic macro stability, citing inflation easing to 3.7% for FY26 and retaining GDP growth projection at 6.5%.

Highlights:

• Repo rate cut of 50 bps exceeds market expectations; CRR reduced by 100 bps.

• Inflation forecast lowered to 3.7% for FY26, GDP target held steady at 6.5%.

• Monetary policy shift aimed at accelerating investment and consumption.

Housing Finance and Real Estate Stocks Rally on Lower EMI Outlook

The rate-sensitive real estate sector led market gains, with the Nifty Realty index jumping 4%. The steep rate cut is expected to result in lower EMIs, directly benefiting homebuyers, particularly in the economically weaker sections (EWS) and low-income groups (LIG). Stocks like Godrej Properties, Prestige Estates, Oberoi Realty, and Mahindra Lifespace rose between 4% to 7% as lower home loan rates improve affordability.

The affordable housing sector, already buoyed by government schemes such as PMAY and SWAMIH Fund 2.0, is expected to see increased traction in both new project launches and homebuyer interest. Housing finance companies like LIC Housing Finance and Piramal Enterprises also posted significant gains amid expectations of improved credit demand and better margin profiles.

Highlights:

• Realty index rises 4%, led by Godrej Prop (+6.5%), Prestige Estate (+6%).

• Lower EMIs to drive demand in affordable housing; finance firms gain on loan growth prospects.

• Government support schemes and reduced rates create favorable home-buying environment.

Banking and NBFC Stocks Benefit From Improved Liquidity

The banking and financial services sector was among the key gainers, with leading NBFCs and private banks recording fresh 52-week highs. HDFC Bank surged to a new yearly peak, while Bajaj Finance, Shriram Finance, and AU Small Finance Bank posted strong intra-day advances. Improved liquidity from the CRR cut is expected to enhance credit availability, particularly for consumer lending and MSME loans.

Lenders now have greater flexibility in pricing and credit distribution, which will be crucial in sustaining credit growth through FY26. With inflation under control and a dovish monetary tone, financial institutions are poised to capitalize on increased borrowing appetite across retail and business segments.

Highlights:

• HDFC Bank hits 52-week high; Shriram Finance, Bajaj Finance lead NBFC rally.

• Lower funding costs and higher loan growth outlook lift banking sentiment.

• Broad-based buying across private and public banks amid robust policy tailwinds.

Broader Market Participation Strengthens Investor Sentiment

Midcap and smallcap indices posted steady gains of 0.5% to 0.7%, signaling broader market participation in the rally. The BSE Midcap index extended gains for a third consecutive session, supported by strong performances in names like Muthoot Finance (+7.09%), Godrej Industries (+14.69%), and IDFC First Bank (+7.02%).

Investor appetite remained strong in both growth-oriented and consumption-linked counters, with mid-tier NBFCs, capital goods players, and auto ancillaries witnessing high turnover. With the RBI indicating potential for more easing if macro conditions require, investors appear to be positioning for a pro-growth environment.

Highlights:

• BSE Midcap index gains 0.7%; smallcap index rises 0.5%.

• Strong moves in Muthoot Finance, IDFC First Bank, and Godrej Ind.

• Optimism driven by liquidity boost, easing inflation, and forward policy signals.

Sectoral Performance: Realty and Metals Lead, Pharma and IT Lag

Sectorally, 12 out of the 13 major NSE indices ended in the green, with only media closing marginally lower. Realty topped the charts, followed by strong gains in metals, banks, auto, and FMCG. On the losing side, IT and pharma stocks faced modest declines due to concerns around global export demand and currency fluctuations.

Among the top gainers, Cochin Shipyard, BSE Limited, Azad Engineering, and MM Financial saw impressive upswings. Momentum in capital goods and industrial stocks reflects optimism over rising domestic capex and infrastructure push in the upcoming quarters.

Highlights:

• Realty sector leads with 4% gain; metals, banks, autos show strength.

• IT, media, pharma marginally underperform amid mixed global cues.

• High activity in capital goods and infrastructure counters indicates revival optimism.

Gold Prices Remain Volatile as Investors Eye Global Cues

Gold prices remained volatile amid the RBI’s dovish policy action and anticipation of the U.S. Federal Reserve’s upcoming rate decision later this month. While domestic demand is expected to improve during the festive and wedding season due to improved purchasing power from softened inflation, international prices are being driven by macroeconomic uncertainty and fluctuating dollar strength.

The easing inflation trend combined with lower interest rates could support discretionary spending on gold and jewellery in India, giving a boost to the gems and jewellery segment in the coming quarters.

Highlights:

• Gold prices volatile amid Fed uncertainty and shifting dollar sentiment.

• Softer inflation may aid domestic gold demand during peak season.

• Gems and jewellery sector likely to benefit from improved purchasing capacity.