RBI policy brings cheer for Indian stocks: Nifty Bank soars over 800 points, realty skyrockets

NEW DELHI: The Indian stock indices ended on a strong note and surged after the larger-than-expected policy rate cut, reflecting elevated optimism among the market participants on the last trading day of the week. At the end of the trading on Friday, the BSE Sensex was at 82,188.99, up 746.95 points, or 0.92 per cent, and the Nifty 50 was up 252.15 points, or 1.02 per cent.

Market analysts say that the RBI’s decision to cut the repo rate exceeds expectations and gives a strong message to the markets that the apex bank is willing to move aggressively when macroeconomic conditions allow.

Following the MPC outcome announcements, Nifty Bank hit a new high as the Central Bank surprised with a larger-than-expected policy rate cut of 50 basis points, taking the repo rate to 5.5 per cent. The Nifty Bank ended at 56,578.40, climbing over 817 points.

“This big rate cut will impact the margins of the banks and, therefore, bank stocks will be under pressure in the near term. However, the credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins”, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

“The Indian stock market responded optimistically to RBI’s surprise and aggressive growth push policy”, Vijayakumar further added.

C S Setty, chairman at State Bank of India and chairman at IBA said, “RBI monetary policy communication was action-packed — innovative, out of the box and an unanticipated surprise”. “The policy is definitely positive for all sectors of the economy, particularly for banking and finance. In particular, lower cost of borrowing will act as a counterbalance to any uncertainty”, he added.

Investors also reacted strongly to the Realty, which rose over 4 per cent. Reacting to the rate cut announcement, Mayank Jain, CEO, Kreeva, a real estate developer, said, “The reduced borrowing cost will not only strengthen homebuyers’ sentiments but also help in easing the liquidity flow in the market”.

“In light of significant market volatility and real estate witnessing a surge in the investment flow, this proactive approach signals the central bank’s strong commitment to thrust economic momentum and boost investor confidence”, Jain added.

Except for Media, which was 1 per cent down on Friday, all other sectoral indices ended higher with metal, auto and consumer durables jumping over 1 per cent each. (ANI)