Sensex jumps 500 points: RBI's bumper rate cut sparks rally on Dalal Street

Stock market today: While Sensex jumped over 500 points, Nifty surged nearly 200 points after RBI reduced the repo rate by 50 basis points to 5.5%. 

In Short

• RBI cuts repo rate by 50 bps to 5.5%, Sensex jumps over 500 points
• Banking, real estate, and auto sectors to benefit from cheaper loans
• Liquidity surplus supports lower savings and deposit rates

Dalal Street cheered RBI's bumper rate cut on Friday, with the market erasing early losses to jump over half a percent. While Sensex jumped over 500 points, Nifty surged nearly 200 points after RBI reduced the repo rate by 50 basis points to 5.5%.

The S&P BSE Sensex was up by 567.15 points to 82,009.19, while the NSE Nifty rallied by 182.60 points to 24,933 as of 10:52 am.

RBI also shifted its policy stance from accommodative to neutral. The RBI maintained its real GDP growth projections for FY26, expecting 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.

Anil Rego, Founder & Fund Manager at Right Horizons PMS, said tha the Reserve Bank of India’s Monetary Policy Committee (MPC) delivered a front-loaded 50 basis point repo rate cut, bringing it down to 5.5%.

Anil Rego, Founder and Fund Manager at Right Horizons PMS, said the RBI’s decision marks a turning point in India’s monetary policy. “The Monetary Policy Committee delivered a front-loaded 50 basis point repo rate cut, bringing it down to 5.5%,” he said. “This shows a shift towards a more balanced and data-based approach, especially in a time of global uncertainties and changing capital flows.”

He also noted that liquidity in India remains in surplus, and banks have already started lowering deposit rates. “Savings account rates have come down to 2.70%, and fixed deposit rates have dropped by 30 to 70 basis points since February,” Rego said. He added that the RBI’s 100 basis point cut since February highlights the urgency to support demand.

Divam Sharma, Founder and Fund Manager at Green Portfolio PMS, said the rate cut will increase liquidity and lower borrowing costs. “This move makes it cheaper for companies to borrow and invest, which is good for long-term growth. With global trade tensions rising, this extra liquidity is a well-timed move,” he said.

He also welcomed the RBI’s decision to cut the Cash Reserve Ratio (CRR) by 100 basis points. “This will free up more money for banks to lend. With foreign investor inflows slowing down, this step brings much-needed funds into the system,” Sharma added.

Banking stocks were among the top gainers after the news. Many rose more than 1%. Experts say banks and non-banking financial companies (NBFCs) will benefit the most from lower funding costs.

Narinder Wadhwa, Managing Director and CEO of SKI Capital Services Ltd., said, “Lower interest rates will boost credit demand. Stocks like HDFC Bank, ICICI Bank, Bajaj Finance, and SBI may do well.”

He added that lower loan rates could help the real estate and housing finance sector too. “With cheaper home loans, developers like DLF and lenders such as HDFC Ltd and LIC Housing Finance may see more demand.”

He also pointed out that the auto sector could gain from the rate cut. “Lower vehicle loan rates should support sales for Maruti Suzuki, M&M, and Hero MotoCorp.”

Wadhwa added that consumer-focused companies may also benefit. “Retail and consumer goods firms like Titan, Trent, and Jubilant FoodWorks may see higher demand as lower EMIs leave people with more money to spend.”

The rate cut may also help sectors such as capital goods and infrastructure. “If borrowing costs go down and companies start new projects, firms like L&T and Siemens may benefit,” he said.

Export-oriented sectors like IT and pharma might see limited gains. A weaker rupee could help their margins, but global trade problems may hit demand. On the other hand, sectors that depend on imports—like oil & gas and metals—might face pressure if the rupee continues to weaken.

Fast-moving consumer goods (FMCG) companies may not do as well in the short term. “As investors turn to growth-focused sectors, FMCG stocks could underperform,” Wadhwa said. However, he added that the overall market mood has improved.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)