In a strong show of optimism, benchmark indices Sensex and Nifty surged by more than 1% by Friday noon, soon after the Reserve Bank of India’s (RBI) much-anticipated rate decision. The BSE Sensex climbed 810 points to 82,252 points, while the Nifty50 gained 265 points to 25,016, reflecting strong investor sentiment on continued policy support from the central bank.

The RBI, in its June monetary policy review meeting that concluded Friday, announced a 50-bps cut in the repo rate, bringing it down to 5.5%. This marks the third consecutive rate reduction since February 2025, highlighting the central bank’s commitment to supporting economic growth amid easing inflation. The Monetary Policy Committee (MPC) voted unanimously in favour of the cut.

Investor enthusiasm was visible across sectors, with banking, real estate, and auto stocks leading the gains. Upasna Bhardwaj, chief economist, Kotak Mahindra Bank, said, “The higher-than-expected repo rate cut comes along with a shift in the stance back to neutral. This points towards future decisions being more data-dependent, given the significant global uncertainties. Furthermore, the sharp drop in CRR is likely to keep liquidity conditions suitably comfortable to ensure monetary transmission.”

Sandeep Bagla, CEO of TRUST MutualFund, "MPC frontloaded the rate cuts, reducing repo rates by 50 bps and also cut CRR by 100 bps. These measures came as a positive surprise to equity markets as there will be greater impetus to growth and there could be faster pick up in the interest rate sectors. Oddly, RBI also changed its stance from accommodative to neutral, thereby signaling that further softening of monetary conditions may not be easily forthcoming. Bond markets experienced some steepening with shorter end of the yield curve seeing some softening. It is complex messaging from RBI where they have eased the policy rates and liquidity but made no promises for the future."

Gaurav Sengupta, chief economist at IDFC FIRST Bank, said the front-loading of the rate cut action, combined with the CRR cut, indicates a focus on enhancing the transmission of monetary policy. “The neutral stance indicates that the bar for further rate cuts is higher but isn’t completely off the table. In the next few policies, we expect the RBI to remain on pause. The CRR cut that will infuse liquidity in H2FY26 will ensure system liquidity remains above 1% of NDTL (Net Demand and Time Liabilities) till March 2026,” he said.

Echoing similar views, Debopam Chaudhari, chief economist, Piramal Group, said, “This landmark policy marks a decisive push to revive domestic growth and could be remembered as a historic pivot in the RBI’s journey—one that catalysed India’s next phase of economic expansion. A bold 50 bps repo rate cut, alongside a 100-bps reduction in the CRR, sends a strong signal of commitment to supporting growth. Together, these measures are likely sufficient to keep the Indian lending ecosystem well-lubricated, even amid persistent global uncertainties."