Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks

The Bank Nifty surged over 550 points to reach 59,548.85 after the Reserve Bank of India (RBI) cut the repo rate by 25 basis points.MPC has also decided to continue with a neutral stance while deciding to conduct OMO purchases of GSec of Rs 1 lakh crore & a 3-year dollar-rupee buy-sell swap.

Growth is expected to soften somewhat going ahead; headline and core inflation are expected to be at or below 4% during 1HFY27, and the growth-inflation balance continues to provide policy space.

Banking stocks are highly sensitive to monetary policy because lower rates reduce borrowing costs, encourage credit growth, and improve the profitability outlook for lenders. Earlier in the session, the index had dipped on concerns regarding yields and market volatility, but the rbi's intervention triggered buying interest again. Investors anticipate stronger loan demand and healthier margins for major banks such as HDFC Bank, ICICI Bank, and SBI, which dominate the index.

As a result, the banking sector led the recovery in the broader market, with Nifty Bank surging from its earlier decline and contributing significantly to the overall rally in the Sensex and Nifty50.

Stocks

Heavyweights such as HDFC Bank, ICICI Bank, and SBI led the rally, with private sector banks showing resilience thanks to healthier balance sheets and steady loan demand. Financial stocks climbed up to 1.5%, with AU Small Finance Bank, Kotak Mahindra Bank and IDFC First Bank gaining between 1% and 1.5%, respectively. Heavyweights HDFC Bank and ICICI Bank were up 0.3% each.