RBI Policy Impact: Sensex Jumps 800 Points, Nifty Crosses 25,000 After Surprise Rate Cut

Market Performance

Indian stock markets surged on June 6 as the Reserve Bank of India delivered an unexpected 50-basis-point rate cut, sparking a bullish wave across sectors.

• Sensex surged 800 points intraday, hitting 82,299.89.
• Nifty 50 climbed 250 points, crossing 25,029.50.
• Midcap and Smallcap indices rose 0.8% and 0.6%, respectively.
• India VIX (volatility index) dropped 2%, signaling lower market uncertainty.

The RBI also revised its FY26 inflation forecast down to 3.7% from 4% while keeping GDP growth expectations steady at 6.5%.

Key Drivers Behind the Rally

1. Rate-Sensitive Sectors Lead Gains

The unexpected rate cut boosted high-growth sectors:

• Realty stocks soared 4.3% (top gainer).
• Financial Services rose 2%, while Banking and Auto sectors gained 1.5% and 1%, respectively.
• Metal and Oil & Gas sectors also saw 1% and 0.4% increases.

2. Shift in RBI's Policy Stance

The RBI changed its stance from 'Accommodative' to 'Neutral,' indicating a cautious approach to future rate cuts.

Why Did the RBI Cut Rates?

The 50 bps reduction aims to:

• Boost economic growth amid slowing inflation.
• Encourage credit flow to businesses and consumers.
• Support sectors like housing, auto, and infrastructure with cheaper loans.

Market Outlook

While the rate cut is positive for long-term growth, experts suggest:

• Bank margins may face short-term pressure due to lower lending rates.
• Further rate cuts may be limited unless economic conditions change.

Summary

The RBI's bold rate cut fueled a strong market rally, with Sensex and Nifty hitting record highs. Sectors like realty, banking, and auto benefited the most, while inflation expectations eased. Investors will now watch how quickly banks transmit lower rates to borrowers.

This move reinforces the RBI's focus on growth revival, setting a positive tone for India's economic recovery.