Companies Markets Economy Live June 7, 2025 0 Comments

Markets surge after RBI delivers 50 basis point rate cut, shifts to neutral stance

Markets staged a sharp recovery on Friday afternoon, with the Sensex gaining 723.71 points to 82,165.75 and the Nifty rising 234.65 points to 24,985.55, following the Reserve Bank of India’s decision to cut the repo rate by 50 basis points to 5.50 per cent and reduce the cash reserve ratio by 100 basis points.

The RBI’s Monetary Policy Committee announced its third consecutive rate cut since February 2025, bringing the cumulative reduction to 100 basis points. The central bank also shifted its policy stance from accommodative to neutral, signalling a data-dependent approach going forward. Governor Malhotra indicated there was “very limited space left to support growth” after the substantial easing measures.

Markets opened lower on Friday amid global uncertainties and anticipation of the policy announcement, with the Sensex falling to 81,193.59 and the Nifty slipping to 24,688.60. However, sentiment improved dramatically following the RBI’s aggressive monetary easing package, which exceeded market expectations of a 25 basis point cut.

Financial services stocks led the rally, with Shriram Finance surging 5.69 per cent, Bajaj Finance climbing 5.28 per cent, and JSW Steel gaining 3.92 per cent. Bajaj Finserv advanced 3.26 per cent while Axis Bank rose 3.24 per cent. On the downside, Bharat Electronics Limited declined 1.00 per cent, HDFC Life fell 0.69 per cent, Sun Pharma dropped 0.34 per cent, SBI Life Insurance shed 0.32 per cent, and Nestle India retreated 0.18 per cent.

The CRR reduction will be implemented in four tranches of 25 basis points each starting September 2025, expected to inject Rs 2.5 lakh crore into the banking system by November 2025. This measure aims to lower banks’ funding costs and enhance lending capacity.

The RBI retained its real GDP growth forecast at 6.5 per cent for FY26 while revising down its CPI inflation projection to 3.7 per cent from 4.0 per cent earlier. The central bank cited easing global commodity prices and stable core inflation as key factors supporting the lower inflation outlook.

Market breadth remained positive with 2,142 stocks advancing against 1,697 declining on the BSE. A total of 104 stocks hit 52-week highs while 37 touched 52-week lows. The Nifty Bank index surged 1.42 per cent to 56,552, while the Nifty Financial Services index jumped 1.84 per cent to 26,871.45.

Ajay Kumar Srivastava, MD & CEO of Indian Overseas Bank, described the policy as “a strong and timely policy shift that aligns with balancing growth with price stability.” He noted that the CRR cut would ease credit conditions and provide necessary drive for credit expansion in priority sectors.

The policy package reflects the RBI’s strategic pivot to invigorate growth while maintaining a cautious stance on future monetary actions. With global trade tensions persisting and weather-related risks identified as key headwinds, the central bank emphasised its commitment to financial stability while providing ample liquidity support for economic expansion.