Rate-sensitives lift Indian shares as RBI's steep rate cut reaffirms growth focus

By Bharath Rajeswaran

Indian shares reversed early losses on Friday, led by rate-sensitive sectors such as financials, auto and realty after the Reserve Bank of India cut its key repo rate by a larger-than-expected 50 basis points in a bid to support economic growth.

The central bank also unexpectedly cut banks' cash reserve ratio by 100 basis points and changed its policy stance to neutral from accommodative.

The Nifty 50 NIFTY rose 0.7% to 25,013, while the BSE Sensex SENSEX traded 0.6% higher at 81,923.4 as of 10:43 a.m. IST. The indexes were down about 0.2% ahead of the RBI policy decision.

Eleven of the 13 major sectors advanced. The broader, more domestically-focussed smallcaps CNXSMALLCAP and midcaps CNXMIDCAP gained about 0.3% and 0.5%, respectively.

Realty CNXREALTY gained 1.5% while auto CNXAUTO added 0.5%.

High-weight financials CNXFINANCE reversed course to climb 1.2%, leading gains in benchmarks.

RBI's surprise 50 bps rate cut underscores its strong pivot towards supporting growth at a time when inflation is under control, said Sonam Srivastava, founder and fund manager at Wright Research PMS.

The move is aimed at unlocking credit growth, reviving private investment and easing the burden on borrowers, and will boost sectors like housing, autos and banking, Srivastava said.