Shriram Finance, Cholamandalam Investment were among BFSI stocks that gained up to 6 percent in Tuesday's trading session on hopes of Reserve Bank of India (RBI) rate cut decision on April 9. Currently, the repo rate stands at 6.25 percent.
The central bank began its three-day bi-monthly monetary policy meeting on Monday which is likely to cut repo rate by 25 basis points (bps), according to Moneycontrol’s poll of 21 economists, treasury heads and fund managers.
"We expect the MPC's focus to shift from concerns about inflation to supporting growth. As a result, the MPC is likely to continue the rate-cutting cycle that began in February, with another 25 bps reduction in the repo rate during the April MPC meeting, while maintaining a neutral stance amid global headwinds," CareEdge said in a report.
A 25 bps reduction in the repo rate will help NBFCs and banks reduce their borrowing costs, which will further be passed on to the customers.
MC Poll| RBI likely to cut repo rate by 25 bps in April policy
The Nifty Financial Services index settled 1.6 percent higher, after soaring over 2 percent earlier in the day on hopes of increase in credit demand post a consecutive second rate cut after February 2025.
All the 20 constituents of the index settled in the green, with most of the them ending the session near the day's high.
Cholamandalam Investment and Finance Company was the top gainer in the Nifty Financial Services index which settled 6 percent higher at Rs 1,469.5 per share on the NSE.
Jio Financial Services followed closely, ending at Rs 225.49, up 5.61 percent. Shriram Finance, SBI Cards and Payment Services, LIC Housing Finance and ICICI Prudential Life Insurance Company ended higher by 4-5 percent.
Heavyweights State Bank of India was up 3 percent, ICICI Bank gained nearly 1 percent and HDFC Bank was up 0.7 percent.
The expected rate cut tomorrow will come after the central bank, for the first time in five years, cut repo rate by 25 bps in February monetary policy.
The RBI has kept its policy repo rate unchanged for the 11th time, till its December MPC meeting, before cutting rates in the February policy. This is after increasing it by 250 bps from May 2022 to February 2023.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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