Optimism took over the sentiment during the afternoon session on Friday, June 6, as the markets celebrated the Reserve Bank of India's Monetary Policy Committee's move to trim the repo rate by an unexpected 50 basis points, while also cutting the CRR (Cash Reserve Ratio) by 100 basis points.
At 11:45 am, the Sensex was up 774.43 points or 0.95 percent at 82,216.47, and the Nifty was up 253.85 points or 1.03 percent at 25,004.75. About 1957 shares advanced, 1406 shares declined, and 139 shares unchanged.
Further, banking and financial stocks got a fillip from the RBI trimming the CRR, also known as the cash reserve ratio, by 100 basis points. The CRR cut will happen in four tranches of 25 basis points each starting from September 6, October 4, November 1 and November 29 this year
On the sectoral front, the Bank Nifty hit a fresh record high at 56,597.45, higher by 1.5 percent. The PSU Bank and Private Bank index also soared 0.7 percent and 1.8 percent respectively. The Nifty Realty index jumped over 4 percent in trade, and the Nifty Auto index was 1.1 percent higher. The Nifty Financial Services index also rallied around 1.8 percent.
The broader markets also cashed in on the cheer, with the smallcap and midcap indices gaining around 0.7 percent each.
Volatility in the markets, as indicated by the India VIX, cooled sharply, with the index sinking 1.8 percent to 14.79.
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Sonam Srivastava, Founder and Fund Manager at Wright Research PMS said, "The RBI’s surprise 50 basis point rate cut underscores its strong pivot toward supporting growth, at a time when inflation is under control and global central banks are entering easing cycles."
“In effect, the June MPC outcome is not merely accommodative—it is assertively growth-targeted, without compromising on credibility. The CRR cut in particular offsets short-term pressures on bank margins from lower rates, ensuring that monetary easing is not liquidity-starved," said Arsh Mogre, Economist, PL Capital.
He added that contrary to fears that the stance shift to ‘neutral’ implies an end to easing, it should be interpreted as a calibration move to retain future optionality and prevent speculative froth. If inflation remains below 4 percent through H2FY26—and transmission visibly improves—there remains room for another 25 bps cut before year-end.
"From a structural point of view, we still need to revive the private investment and consumption in the country, which have shown some traction of late but still require stronger tailwinds. With the fiscal health of the government and corporates, capacity utilisation and government capex still remaining strong, the biggest risk for the upcoming months remains global headwinds and monsoon and weather-related anomaliesm," said Sankar Chakraborti, MD & CEO, Acuité Ratings.
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