Since February this year, the Reserve Bank of India (RBI) has reduced the repo rate by a total of 100 basis points. The first rate cut came in February, followed by another in April, and most recently, a surprise 50 basis point cut in June. This series of rate reductions has brought the repo rate down from 6.50 percent to 5.50 percent, signaling a clear shift toward monetary easing to support economic growth.
Key Highlights of the RBI MPC June meeting
The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points, bringing it down from 6.0 percent to 5.5 percent, as part of a broader monetary easing move. The Standing Deposit Facility (SDF) has been reduced from 5.75 percent to 5.25 percent, while the Marginal Standing Facility (MSF) and Bank Rate have been lowered from 6.25 percent to 5.75 percent.
The policy stance has shifted to “neutral”. RBI projects real GDP growth at 6.5 percent for FY26, with quarterly estimates at 6.5 percent (Q1), 6.7 percent (Q2), 6.6 percent (Q3), and 6.3 percent (Q4). The CPI inflation target for FY26 is set at 3.7 percent, ranging from 2.9 percent in Q1 to 4.4 percent in Q4.
Additionally, forex reserves stand at $691.5 billion as of June 2025. In a significant move to ease liquidity, the cash reserve ratio (CRR) has been cut by 100 bps to 3 percent, releasing approximately Rs 2.5 lakh crore into the banking system and lowering the cost of liquidity for policy transmission.
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Sectors & Stocks to benefit & Why
1. Banking & Financial Services
Stocks in this sector that stand to benefit from the rate cuts include HDFC Bank, ICICI Bank, State Bank of India (SBI), Kotak Mahindra Bank, and Bank of Baroda, Interest rate cuts can benefit the banking sector by boosting loan demand, improving asset quality through lower default risk, and potentially driving up valuations due to better profitability expectations.
2. Real Estate
Stocks in this sector that stand to benefit from the rate cuts include DLF, Lodha, Prestige Group, and Goodrej Properties. Reduced interest rates positively impact the real estate sector by making mortgages more affordable, encouraging homebuyers, boosting sales volumes, and aiding developers in financing new projects, leading to higher revenue and stronger demand across residential and commercial segments.
3. Infrastructure
Stocks in this sector that stand to benefit from the rate cuts include L&T, NBCC, KEC, RVNL, and IRB Infra. Lower interest rates are likely to benefit the infrastructure sector by reducing project funding costs, speeding up execution, and encouraging higher government spending. This can improve profitability, enhance operational efficiency, and support steady revenue growth for infrastructure companies.
4. Automobiles
Stocks in this sector that stand to benefit from the rate cuts include Maruti Suzuki, Mahindra & Mahindra, Bajaj Auto, TVS, and Ashok Leyland. Lower interest rates boost the auto industry by making vehicle loans more affordable, driving up consumer demand and sales, especially in passenger and commercial vehicles. Improved financing also supports economic activity and encourages manufacturers to invest in new models and expand capacity.
5. NBFC
Stocks in this sector that stand to benefit from the rate cuts include Bajaj Finance, Jio Financial Services, PFC, REC, and IREDA. Lower interest rates benefit both public and private NBFCs involved in capital-intensive project financing by reducing borrowing costs, boosting loan demand, and improving profit margins. As infrastructure and energy project activity rises with economic growth, these NBFCs are well-positioned for increased disbursements and long-term expansion, supported by strong capital ratios.
6. FMCG & Consumer Durables
Stocks in this sector that stand to benefit from the rate cuts include Hindustan Unilever, Dmart, Nestle, Varun Beverages, Britannia, Dixon, and Kaynes Technology. A rate cut boosts FMCG and consumer durables by increasing disposable income and lowering borrowing costs for consumers and businesses. This drives higher demand for appliances and everyday goods, supports business expansion, reduces costs, and encourages innovation, all of which can improve stock performance and investment appeal.
7. GOLD
Lower interest rates make gold a more appealing investment as earnings on interest-bearing instruments, like as savings accounts, decline, and an RBI rate drop might result in higher gold prices. Lower borrowing costs may lead to more investment and consumer spending, which would increase demand for gold as a store of wealth.
Written By Abhishek Das
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