# Dalal Street cheers! As expected, Nifty and Bank Nifty climb after RBI slashes the repo rate by 25 bps to 5.25%.

Nifty (+74, 26109)
Sensex (+253, 85518)
Bank Nifty (+301, 59312)

# What the Rate Cut Means for the Stock Market

RBI’s 25 bps rate cut to 5.25% is broadly positive for equities as it lowers borrowing costs, improves liquidity, and boosts economic sentiment. Historically, rate cuts tend to re-rate growth sectors and revive consumption cycles.

Sectors Likely to Benefit the Most:
1) Banking & Financials (Immediate Beneficiary)
• Lower cost of funds improves margins for banks.
• Credit demand for retail loans (home, auto, personal) typically rises.
• NBFCs gain even more due to high dependence on borrowed funds

2) Real Estate & Homebuilding
• Reduced mortgage rates can revive housing demand.
• Developers benefit from lower financing costs and improved affordability.

3) Automobiles (Consumer Discretionary)
• Auto loans get cheaper.
• Helps revive demand for passenger vehicles, 2-wheelers and commercial vehicles.

4) Capital Goods & Infrastructure
• Lower financing costs support capex recovery.
• Infra and construction companies benefit from improved liquidity and easier project funding.

5) Rate-Sensitive Midcaps & Smallcaps:
• Lower interest costs improve profitability.
• Liquidity inflows generally chase high-beta pockets post rate cuts.

6) FMCG & Consumer Durables:
• Improved disposable income + cheaper EMIs = stronger consumption momentum.
• Big boost during festival-driven months.

7) Neutral-to-Mixed Impact
IT & Pharma:
• Beneficial indirectly via macro sentiment,
• But a weaker rupee (INR at 90+) offsets the impact and actually supports export-heavy IT.

# Likely Laggards:
1) PSU Banks with large G-Sec books
• Bond yields may fall after rate cuts; MTM gains possible but uncertain.
• Profit impact depends on treasury positioning.

2) Commodities / Metals
• Rate cuts do not have a direct impact; global cues matter more.

(Source: Bloomberg, Pradyut Patnaik, SEBI Registration No.: INH000001238, liveMint, Moneycontrol, business Standard)

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