Rate-sensitive auto, realty stocks surge up to 3%, banks decline after RBI MPC cuts repo rate

Stocks in rate-sensitive sectors reacted mixed to the Reserve Bank of India's (RBI) decision to cut the repo rate by 25 basis points to 6.25% for the first time in nearly five years.
While auto and real estate stocks surged up to 3%, banking and financial stocks fell nearly 1.5%.

Among auto stocks, Apollo Tyres, Ashok Leyland, M&M, and Samvardhana Motherson International gained up to 3%. In the realty sector, Lodha, Godrej Properties, and Oberoi Realty rose between 1% and 2.6%.


On the other hand, banking and financial stocks saw declines, with Bajaj Finance, SBI, Axis Bank, and ICICI Bank among the top losers from the Nifty Financial index, falling up to 1.2%.

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RBI cuts repo rate to 6.25%

The RBI's Monetary Policy Committee (MPC), led by newly appointed Governor Sanjay Malhotra, announced a 25 bps cut in the repo rate, lowering it to 6.25%.

"The MPC remains unambiguously focused on a durable alignment of inflation with the target while supporting growth," Malhotra said.

This marks the first rate cut since May 2020. Before this, the RBI had held the repo rate steady at 6.5% for eleven consecutive meetings. In its December policy review, the MPC had voted 5-1 to maintain rates, prioritizing inflation control while monitoring economic stability.

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Additionally, the December policy included a 50 basis point reduction in the Cash Reserve Ratio (CRR), bringing it down to 4%, aimed at enhancing liquidity and supporting credit growth.

For the financial year 2024-25, the RBI has projected India’s real GDP growth at 7.2%, while the Economic Survey forecasts a 6.4% growth, in line with the National Statistical Office (NSO) estimate.

Meanwhile, the central bank raised India's FY26 growth forecast to 6.7% from 6.6%, while the Sanjay Malhotra-led MPC projected inflation at 4.2% for the fiscal year. For the four quarters of FY26, the RBI MPC has projected inflation to be at 4.5% in the first quarter; Q2 at 4%; Q3 at 3.8% and Q4 at 4.2% with risks evenly balanced.

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