Here are the sectors and stocks in focus amidst RBI rate cut hopes

A recent poll of economists, bank treasury heads, and market experts by Moneycontrol also showed that majority expect the RBI, under the new governor Sanjay Malhotra, to announce a rate cut. Experts believe that rates could be reduced by 25 basis points (bps) from 6.5 percent to 6.25 percent.

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26 Aug, 2025 12:21

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Sectors such as consumer durables, financials, NBFCs, auto, housing finance, and consumption are likely to be in focus today if the Reserve Bank of India (RBI) announces the much-expected rate cut, say market experts.

A recent poll of economists, bank treasury heads, and market experts by Moneycontrol also showed that majority expect the RBI, under the new governor Sanjay Malhotra, to announce a rate cut. Experts believe that rates could be reduced by 25 basis points (bps) from 6.5 percent to 6.25 percent.

Also read: MC Poll: RBI MPC likely to cut repo rate on Feb 7, say economists

“The consensus is definitely expecting the RBI to start with a rate cut and then further provide a medium-term trajectory about the pace of rate cuts and how the RBI will manage liquidity,” said Ananth Rathi's Head of Research Narendra Solanki. “This is crucial for reviving overall economic growth and handling the USD-INR equation,” he added.

With the recent liquidity injection by the Reserve Bank of India (RBI) and rising market optimism, a decision by the RBI to cut interest rates could result in positive sentiment across sectors.

According to Solanki, financials and NBFCs are directly impacted as liquidity conditions improve. With cheaper credit available, small finance banks, which have a higher proportion of unsecured lending, are expected to see increased interest.

On the other hand, large private banks are likely to be resilient and focus on improving their balance sheet quality. Motilal Oswal Financial Services’ Sneha Poddar is of the view that companies with a higher fixed-rate portfolio will see a greater impact. Bajaj Finance and Shriram Finance are some of the companies that could benefit the most.

Shrikant Chouhan, Head of Research at Kotak Securities sees benefits for the auto sector. "The auto sector will be among the first beneficiaries, with two-wheelers leading the pack, followed by budget-friendly car manufacturers like Maruti," he says. Lower loan rates will encourage consumer spending in both rural and urban markets. Two-wheeler stocks like Hero Motorcorp and TVS Motors could gain.

With the RBI supporting liquidity and consumer spending, companies in the consumption sector stand to benefit. "Consumption has been lagging for the past two quarters, especially in urban areas. Companies catering to urban consumption should see some action," said Solanki. Sectors like consumer durables, including companies such as Voltas and Havells are expected to gain as financing costs drop, boosting sales of household goods.

"Interest rate cuts will spur activity in the affordable and mid-range housing segments, as lower EMIs make home purchases more attractive," Chouhan added. The real estate sector, which has seen strong demand despite rising prices, is likely to receive further momentum from cheaper home loans.

“Post the budget and with the new government taking over, the market has priced in a possible RBI stance change. We’ve seen markets recover from their lows, but as we approach the announcement, there’s visible nervousness. The market is hedging its bets,” says Solanki.

If the rate cut does not happen, it will likely have a short-term negative impact on market sentiment, leading to some level of correction. "The market has already factored in the possibility of a rate cut and is expecting a dovish stance from the RBI. If this expectation is not met, profit booking may be triggered, especially in mid-cap and small-cap stocks," said Poddar.

In a similar context, Chouhan added that failure to deliver on the rate cut expectation could trigger a broad correction across sectors.

"NBFCs, large banks, and real estate firms could all be affected. The psychological impact on consumers and industries would be significant, as uncertainty over monetary policy would lead to hesitation in borrowing and spending. If rate cuts are delayed, buyers who have been waiting for better loan conditions might rethink their investment plans," he said.

He also added that bond yields will also be a key factor. If the rate cut does not happen, bond yields could rise again, which would negatively impact bond prices and, in turn, affect larger banks.

He further added that the market is not only looking for confirmation of the rate cut but also for guidance from the RBI governor on the future policy outlook. "The Governor’s commentary will play a crucial role in shaping market confidence,” he added.