The Reserve Bank of India’s unexpected dual move of announcing a 50 basis point cut in the repo rate and a 100 basis point reduction in the Cash Reserve Ratio took markets by surprise, propelling the Nifty Bank index to a new all-time high.
The index surged over 1.3 percent intraday to cross the 56,500 mark for the first time, hitting a peak of 56,597.45.
Leading the gains were IDFC First Bank, which jumped close to 7 percent, followed by IndusInd Bank which jumped 4 percent, and then followed by Axis Bank rising over 3 percent and Punjab National Bank rising over 1 percent.
Heavyweights like ICICI Bank and HDFC Bank also posted moderate gains, adding weight to the rally.
The broader market echoed the optimism, with the benchmark Sensex climbing 810 points to close at 82,252, while the Nifty 50 surpassed the historic 25,000 mark, ending the day at 25,068, up 265 points.
The RBI, on June 6, announced a sharper-than-expected cut in the repo rate, bringing it down from 6 percent to 5.5 percent.
In a further push to inject liquidity into the banking system, the central bank also slashed the Cash Reserve Ratio (CRR) by 100 basis points to 3 percent.
RBI Governor Sanjay Malhotra, in his policy statement, acknowledged that inflation had moderated within the comfort band, creating room for policy easing.
He emphasised that the focus would now shift decisively toward supporting growth, credit demand, and financial stability.
The CRR cut, in particular, is expected to inject substantial liquidity into the system, boosting banks’ lending capacity ahead of a critical investment cycle, he said.
With today’s policy action, the RBI has now delivered 125 basis points in cumulative rate cuts this year.
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