RBI has announced a repo rate cut of 50 basis points to 5.50% from 6% in the June 2025 monetary policy meeting. In line with dropping inflation, the RBI has taken the direct way to fuel economic growth, led by lower interest rates on loans and a way to boost investment. In this blog, we’ll know in detail which sectors and stocks are most likely to benefit from the RBI repo rate cut announcement.
RBI Repo Rate Cut: Key Announcements
- Reduction in Repo Rate: The RBI has reduced the policy repo rate by 50 basis points to 5.50% to support the GDP growth amidst falling inflation.
- CRR Cut: Cash Reserve Ratio (CRR) has been reduced by 4% to 3% in four tranches of 25 bps each, starting from September 2025.
- Accommodative to Neutral: The central bank has also changed its monetary policy stance from accommodative to neutral. This means that future policy repo rate decisions will be based on prevailing economic conditions and inflationary situations.
- CPI Inflation Outlook: In April 2025, India’s CPI inflation dropped to a nearly six-year low of 3.2%. For FY26, the RBI has projected the CPI inflation at 3.7%, down from the previous projection of 4%.
- India’s Real GDP Growth: The real GDP growth rate has achieved new heights of 7.4% in the fourth quarter of FY25. However, the real GDP growth rate fell to a nearly four-year low of 6.5% in FY25. For the next financial year, i.e., for FY26, the RBI has projected a steady growth of 6.5%
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5 Sectors to Benefit from Repo Rate Cut
Here is the list of the top 5 sectors that stand to benefit from the repo rate cut and CRR cut in the near future:
1. Banking Sector
The banking sector will benefit from the repo rate cut as it reduces the rate at which the RBI lends money to commercial banks. The reduction in repo rate means that the banks have to pay less interest on the borrowed money from the RBI, thereby inducing banks to borrow more money and increase the money supply.
The cut in CRR (meaning the share of deposits the banks have to keep with the RBI) by 100 bps will infuse ₹2.5 lakh crores into the banking system, thereby increasing liquidity in the system and banks’ lending capacity.
Both these moves can be considered to increase the money flow in the economy, which can eventually lead to higher spending, investment, and deposits as well. On the day of the RBI rate cut announcement, i.e., on June 6, the Nifty Bank Index closed with a 1.47% gain at 56,578.40 points.
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2. NBFC Sector
The repo rate cut directly benefits the borrowers as it reduces the interest rates on loans. This means that households and individuals will tend to take more loans at cheaper rates. The repo-rate-linked loans will also see a lower EMIs, thereby increasing disposable income.
This means that the NBFC will get higher credit demand from households and MSMEs. The housing finance companies, infrastructure finance companies, and auto finance companies are the ones that can also benefit from this move.
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3. Automobiles
With lower interest rates, people are more likely to finance their cars and bikes through loans. The cut in repo rate will increase discretionary spending and generate higher interest in automobile purchases.
The affordable financing options will benefit entry-level and mid-level segments, signaling higher demand for two-wheelers (electric two-wheelers) and cars.
On the day of the RBI rate cut announcement, i.e., on June 6, the Nifty Auto Index closed with a 1.52% gain at 23,661.30 points.
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4. Real Estate
Once the banks pass on the repo rate cut benefit to the borrowers, it will reduce EMIs or interest burden for borrowers. This is a big relief for homebuyers (especially for first-time buyers) as well as in the affordable or high-cost housing segment.
Developers will also get big relief with lower borrowing rates, thereby leading to faster project execution and keeping construction costs under control. The homeowners will get the twin benefit with lower interest rates on home loans and budget-friendly options from the developers. Today, the Nifty Realty Index closed with a 4.68% gain at 1,039.60 points.
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5. Consumer Durables/ FMCG
The cut in interest rates and lowering inflation can increase rural and urban demand with higher disposable income in hand. The lower borrowing costs increase the demand for consumer durables products such as TV sets, air conditioners, and refrigerators.
The rural demand will get a great boost with the easing of credit conditions, which is a major driver of FMCG companies. With higher business credit, the supply chain and inventory efficiency will rise, which can also provide a benefit to the FMCG players.
Overall, the rate cut increases consumer spending, leading to higher sales and revenue of consumer durables or FMCG companies. Today, the Nifty Consumer Durables Index closed with a 1.32% gain at 37,495.35 points.
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Conclusion
The Indian equity market is poised for greater recovery and growth from this 50 bps rate cut announcement, despite global headwinds. However, the actual benefit of this repo rate cut and how it gets passed on to the consumers or companies will be clearer over a period of time.
It is better to do your own research before investing in any stock, and always keep your investment objective and risk profile in mind. You can easily keep track of these stocks and invest on the go by opening free Demat Account with SMC Global Securities.
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