The Indian stock market witnessed a robust rally on June 6, 2025, as the Reserve Bank of India (RBI) announced a larger-than-expected 50 basis points (bps) repo rate cut, bringing it down to 5.5%. This marked the third consecutive rate cut in 2025, totaling a 100 bps reduction for the year. Alongside, the RBI slashed the cash reserve ratio (CRR) by 100 bps to 3%, releasing ₹2.5 lakh crore in liquidity to stimulate the banking system. The SENSEX surged by 858 points intraday, closing 747 points higher at 82,189, while the NIFTY50 index touched an intraday high of 25,030 and settled at 25,003, up 252 points.
Market Reaction to RBI’s Monetary Policy
The RBI’s monetary policy committee (MPC) surprised markets with a 50 bps repo rate cut, against expectations of a modest 25 bps reduction. This decision, coupled with the CRR cut, boosted investor sentiment, leading to a third straight session of gains for Indian equity benchmarks. The increased liquidity and lower borrowing costs are expected to spur economic activity, particularly in rate-sensitive sectors like banking, realty, and auto.
-
SENSEX Performance: The SENSEX climbed as much as 858 points during the day, ending at 82,189 with a gain of 747 points.
-
NIFTY50 Performance: The NIFTY50 index hit an intraday peak of 25,030, closing at 25,003, up 252 points.
NIFTY Midcap 100 Index Shines
The NIFTY Midcap 100 index also joined the rally, rising 1.21% (707 points) to close at 59,010. Out of the 100 stocks in the index, 68 ended in the green, reflecting broad-based buying interest.
Top Gainers in NIFTY Midcap 100
-
IDFC First Bank: The stock emerged as the top gainer, soaring 7% to ₹71.50, driven by the RBI’s repo rate cut, which is likely to reduce borrowing costs and enhance credit growth.
-
Muthoot Finance: The stock gained 6.98% after the RBI increased the loan-to-value (LTV) ratio for gold loans under ₹2.5 lakh to 85% from 75%, benefiting gold financing companies.
Why the RBI’s Moves Matter
The 50 bps repo rate cut and the 100 bps CRR reduction are significant steps to support economic growth. The repo rate cut lowers the cost of borrowing for banks, which can pass on the benefits to consumers through reduced loan interest rates. The CRR cut, meanwhile, injects substantial liquidity into the banking system, enabling more lending to productive sectors.
