RBI's Surprise 50 bps Rate Cut Ignites Market Frenzy: Sensex Soars 1,160 pts, Nifty Reclaims 25K

 

June 7, 2025 | MWM Business Desk

Market Euphoria Unleashed

                 In a blockbuster move, the RBI slashed repo rates by 50 bps to 5.5% – double Street expectations – triggering a historic rally across Dalal Street. The Sensex rocketed 1,160 points from its intraday low to close at 82,300, while the Nifty50 surged past 25,000 as rate-sensitive stocks went berserk.

Key MPC Decisions Fueling the Rally:

1. Repo Rate Cut: 50 bps reduction to 5.5% (vs. 25 bps expected)
2. Stance Shift: Moved to ‘neutral’ from ‘accommodative’
3. CRR Slash: Cut by 100 bps to 3%, injecting ₹2.5 lakh crore liquidity
4. Inflation Outlook: FY26 forecast lowered to 3.7% (from 4%)
5. Growth Focus: RBI signals demand revival amid global uncertainty

 

Sectoral Tsunami: Who Gained Most?

Sector	Nifty Index Gain	Top Performers
Real Estate	+4.1%	DLF (+6.2%), Sobha (+5.8%)
Private Banks	+2.7%	Axis Bank (+4.3%), ICICI (+3.1%)
Financial Services	+2.5%	Bajaj Finance (+5%), HDFC Life (+3.4%)
Automobiles	+1.8%	Maruti (+3.2%), M&M (+2.7%)

Pharma and media sectors were the only laggards.

 

Why This Is a Game-Changer

• Home Loans: EMIs on ₹50L loans to drop by ₹2,900/month
• FD Rates: Likely to fall 50-75 bps; debt funds turn attractive
• Corporate Boost: Borrowing costs for businesses to decline ~60 bps
• Liquidity Surge: CRR cut equals 1.5x the size of last year’s OMO purchases

 

Churchil Bhatt (Kotak Life Insurance):
*"This is RBI’s ‘shock and awe’ moment. Front-loaded cuts with a neutral stance suggest they’re done for 2025."*

 

Expert Decoder: What’s Next?

Bull Case:

• Real estate to see 15-20% sales jump as affordability improves
• Auto sector poised for record festive-season demand
• FIIs may return as yield gap with US narrows

Risks:

• Global oil price spike could derail inflation trajectory
• Fed’s delayed rate cuts may pressure INR

Jashan Arora (Master Trust):
"With GDP at 7.2%, inflation at 3.7%, and rates falling, India is the last standing growth oasis."

 

Technical Take: Charts Scream ‘Buy’

• Nifty breaks 3-week consolidation; next resistance at 25,800
• Bank Nifty confirms bullish reversal; 58,000 in sight
• VIX crashes 8%: Options traders bet on stability

Dharan Shah (Tradonomy):
"Markets hate uncertainty. Today’s clarity makes every dip a buying opportunity."

 

Political Economy Angle

• Rate Cut Timing: Comes days before Union Budget 2025
• Govt-RBI Sync: Fiscal deficit control enabled bold monetary move
• Election Impact: Boosts consumption ahead of 5-state polls

 

RBI’s bazooka has reset market expectations. For investors, the message is clear: Stay long on India. With liquidity gushing and macros golden, this rally has legs.

Next Triggers:

• June 12: US CPI data
• July 1: Auto sales numbers
• July 23: Union Budget

Data as of 3:30 PM IST | © 2025 MWM. All rights reserved.