The monetary policy committee has now lowered the repo rate by a cumulative 125 basis points since February to 5.25%. It kept rates unchanged in August and October.
At 9:46 AM, before the policy announcement, the Nifty Bank index was at 59,349.05, up 0.10%. Nifty Auto stood at 27,764.00, up 0.11%, while Nifty Realty was at 892.45, up 0.26%.
Following the policy decision after 10 AM, Nifty Bank rose 0.6% to 59,658.65. Nifty Auto advanced 0.4% to 27,850.25, and Nifty Realty gained 1% to 899.05.
Financial stocks climbed up to 1.5%, with AU Small Finance Bank, Kotak Mahindra Bank and IDFC First Bank gaining between 1% and 1.5%. Heavyweights HDFC Bank and ICICI Bank were up 0.3% each.
Realty names including Brigade Enterprises, Oberoi Realty, Prestige Estates Projects and DLF rose between 1% and 2%.
Among auto stocks, Maruti Suzuki, Eicher Motors and Mahindra & Mahindra gained up to 1%.In the broader market, small-caps fell 0.6%, while mid-caps traded flat.
Announcing the decision, the RBI Governor said, “The MPC met on the 3rd, 4th, and 5th of December to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic conditions and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 5.25 per cent, with immediate effect.”
With Friday’s announcement, the latest MPC meeting formally concluded.
Dr Ravi Singh, Chief Research Officer at Master Capital Services, said the policy shift aligns well with the current macroeconomic environment. He noted that “The RBI’s 25 bps cut to 5.25% is a timely, growth-oriented move supported by a soft inflation backdrop, with core CPI easing and the full-year print expected near 2%.”
Singh said that the central bank’s liquidity measures will aid transmission, saying, “The liquidity boost through OMOs and the USD/INR swap will help lower funding costs and improve credit transmission.”
Rate-sensitive sectors stand to gain in the near term, according to Dr Singh. As he put it, “For the equity market, the policy is constructive for rate-sensitive sectors like Banks, NBFCs, Autos, and Real estate stand to benefit from a better demand outlook and stronger earnings visibility.”
Singh also highlighted the significance of the central bank’s posture, noting that “By retaining a neutral stance, the RBI has kept the door open for further calibrated easing while maintaining macro stability amid a broadening economic recovery.”