Rate-sensitive stocks mixed as RBI MPC cuts repo rate by 25 bps; auto outshines, bank, realty stocks tank

Monetary Policy Committee Meeting, April 9, 2025

Rate-sensitive stocks, such as banking, NFBC, and auto counters, settled mixed on April 9, as the Reserve Bank of India's Monetary Policy Committee slashed the key lending rate by 25 basis points, taking a unanimous decision. Further, the central bank shifted its stance to 'accommodative'.

Investors bet on easing borrowing costs, which would boost demand for housing and auto products, in turn improving profitability for lenders, either banks or non-banking financial companies.

At close, while the frontline indices Nifty 50 and Sensex were down by over half a percent, the Nifty Auto index eked out minor gains of 0.01 percent to end at 20,140.4. On the flip side, the Bank Nifty and Nifty Private Bank indices were down 0.5 percent and 0.3 percent respectively. The Nifty Realty index cracked 1.9 percent in trade.

During the February meeting, the RBI MPC cut the lending rate by 25 basis points to the 6.25 percent mark, down from 6.5 percent earlier, marking the first rate cut in five years.

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The RBI's repo rate cut comes amid  heightened global uncertainty and its likely impact on domestic growth, inflation and the currency. These factors would weigh heavily on the minds of RBI MPC members, and Trump’s tariffs will capture major mindshare as they evaluated appropriate policy responses.

"The policy views of the newly appointed deputy governor Poonam Gupta will also be closely monitored; which will most likely be revealed in the minutes of the MPC meet," said JM Financial.

"It may be too early to consider actual forecast changes, but to state the obvious: risks to the RBI’s FY26 growth of 6.7 percent are materially downward. This will emanate from a much higher risk of a US/global recession if such global tariffs are maintained. The disinflationary impulse for Indian industry could emanate from lower global commodity prices/supply glut of goods," said Emkay Global.