Bank Nifty slips below 50K mark after RBI cuts repo rate 

Banking stocks crashed on Wednesday after the Reserve Bank of India (RBI) cut the repo rate by 25 basis points to 6 per cent with immediate effect. The central bank cut the repo rate in its second consecutive policy today. However, investors in banking stocks were not enthused. Bank Nifty gave up the 50,000 mark, falling 601 pts to a low of 49,910 after the rate cut was announced. 

The BSE bankex also slipped 687 pts to a low of 57,301 against the previous close of 57,988.  On BSE bankex, SBI was the top loser. SBI stock slipped 2% to Rs 752.80 on BSE. Market cap of SBI slipped to Rs 6.72 lakh crore. 

Bank of Baroda stock slipped 1.74% to Rs 231.70 on BSE. Market cap of the lender fell to Rs 1.19 lakh crore. Other lenders such as Axis Bank, ICICI Bank, Canara Bank were the top losers on BSE bankex slipping up to 1.5% on early deals . On the other hand, IndusInd Bank and Kotak Mahindra Bank were the marginal gainers capping the losses by up to 0.15%.

The 25-bps rate cut is expected to support the Indian economy. The RBI trimmed its GDP forecast for the ongoing financial year and cited uncertainties regarding tariff wars globally. 

On the data front, RBI cut its GDP growth forecast to 6.5 from 6.7 percent and CPI inflation was revised to 4 from 4.2 percent.

Ajit Mishra – SVP, Research, Religare Broking said, "Overall, the RBI’s latest policy measures are aimed at preserving long-term macroeconomic stability while addressing near-term risks. By enhancing liquidity and reducing interest rates, the central bank seeks to support domestic momentum, counterbalance external shocks such as global trade disruptions and U.S. tariff actions, and create a more conducive environment for sustainable economic growth."

Shriram Ramanathan, CIO, Fixed Income, HSBC Mutual Fund said, “The RBI MPC managed to meet the market’s hefty expectations, by announcing a 25bps repo rate cut along with a change of stance to accommodative. Importantly, the MPC now believes that the headline CPI is aligned on a durable basis to the 4% target, thereby allowing them to focus unequivocally on growth. The RBI Governor has clearly indicated the softening path of policy rates going forward as well, which we expect to move at least towards 5.5% over the course of CY2025, along with continuation of liquidity infusion measures – all of which bode well for the continued downward trajectory of interest rates”.