RBI’s 50 bps cut sparks market optimism: Will US-India trade talks seal the deal?

The Reserve Bank of India's surprise 50 basis point repo rate cut to 5.5%, coupled with a 100 bps CRR reduction, has injected Rs 2.5 trillion liquidity, fueling a sharp rally in Sensex and Nifty above 25,000. As banks swiftly pass on rate cuts, real estate demand surges and market experts foresee sustained gains, hinging on the progress of critical US-India trade negotiations aiming for a July interim agreement.

Sources:
IndiatodayMoneyCnbctv18+6
Updated 1h ago
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Sources: IndiatodayMoneyCnbctv18+4
The Reserve Bank of India (RBI) surprised markets with a 50 basis point cut in the repo rate to 5.5%, marking the third consecutive reduction this year. This aggressive move exceeded market expectations and was aimed at stimulating domestic demand, easing credit conditions, and boosting investment across sectors.

The rate cut immediately lifted investor sentiment, with the BSE Sensex rising by 747 points (0.92%) to 82,189 and the NSE Nifty gaining 252 points (1.02%) to close at 25,003. Market experts noted that the RBI’s pro-growth stance is likely to sustain momentum, especially in rate-sensitive sectors.

“The RBI’s rate cut and neutral stance are likely to support market momentum in the near term,” said Puneet Singhania, Director at Master Trust Group.

Banks swiftly passed on the benefits to borrowers, with Bank of Baroda, Punjab National Bank, UCO Bank, and Bank of India reducing their lending rates by 50 basis points.

The move also bolstered the real estate sector, with developers expecting increased housing demand and improved affordability. Deepak Kapoor, Director of Gulshan Group, remarked, “The decision signals the central bank's confidence in the growing resilience of the country's economy... it will translate into an increase in new homeownership numbers.”

Meanwhile, optimism is building around the ongoing US-India trade talks, which have been extended to finalize an interim deal by July 9. This potential agreement is expected to further boost market sentiment and economic growth.

“We expect Indian markets to witness a gradual up-move, supported by positive sentiment following the RBI rate cut and optimism surrounding a potential US-India trade agreement,” analysts said.

The RBI also cut the cash reserve ratio by 100 basis points, injecting Rs 2.5 trillion liquidity into the banking system, further supporting credit growth.

Technical indicators show the Nifty poised for further gains, with support levels holding firm and the India VIX fear index dropping to a two-month low, signaling reduced market anxiety.

Overall, the RBI’s decisive monetary easing combined with trade negotiations has sparked renewed optimism among investors and sectors alike, setting a positive tone for the Indian economy in the near term.
Sources: IndiatodayMoneyMoneycontrol+1
The Reserve Bank of India’s surprise 50 basis point repo rate cut to 5.5% sparked market optimism, lifting the Sensex and Nifty by nearly 1%. This pro-growth move, coupled with ongoing US-India trade talks aiming for a deal by July, has boosted investor sentiment and sectoral growth prospects.
Section 1 background
A big news indeed. The decision to reduce the repo rate by 50 bps or 0.5% takes the total decrease in the repo rate by 1% in a short span of 6 months. The move also signals the central bank's confidence in the growing resilience of the country's economy which is increasingly exhibiting signs of certainty in the dynamically evolving global economic order. For the real estate sector, it will translate into an increase in new homeownership numbers.
Deepak Kapoor
Director
1
The RBI's decision to lower the repo rate by 50 basis points sends a strong pro-growth signal and undoubtedly benefits the real estate sector. Amidst the positive sentiments prevailing in the real estate sector, the decision will make the home-buying process for first-time homebuyers increasingly accessible.
Sandeep Chhillar
Founder and Chairman
1
The RBI’s rate cut and neutral stance are likely to support market momentum in the near term, especially in sectors that react positively to lower interest rates.
Puneet Singhania
Director at Master Trust Group
Indiatoday
The Indian stock market responded optimistically to the RBI’s surprise and aggressive growth-push policy. The substantial rate cut and liquidity boost via the are expected to ensure swift transmission of lower rates, reinforcing the RBI's commitment to supporting economic growth, boosting investments, and stimulating consumption.
Vinod Nair
Head of Research
M
The Nifty rose sharply following the RBI’s policy move and closed above the 25,000 mark after several sessions, signaling rising optimism. Typically, a rally followed by consolidation results in an upward breakout. This time too, we expect Nifty to break out above the recent consolidation range.
Rupak De
Senior Technical Analyst at LKP Securities
M
Key Facts
  • RBI cut the repo rate by 50 basis points to 5.5%, marking the third consecutive reduction in 2025, signaling a strong commitment to stimulate domestic demand, ease credit, and boost investment.1
  • Banks including Bank of Baroda, Punjab National Bank, UCO Bank, and Bank of India reduced lending rates by 50 basis points following the RBI's repo rate cut to pass benefits to borrowers.Cnbctv18
  • Indian stock markets responded positively with the Sensex rising by 747 points to 82,188 and the Nifty crossing the 25,000 mark, reflecting investor optimism.MMoney
  • Foreign Institutional Investors (FIIs) increased equity purchases with buys worth Rs 1,009.71 crore on Friday, supporting the market momentum.Money
  • Real estate sector saw renewed buyer confidence and improved affordability due to lower borrowing costs, with developers expecting increased homeownership and fresh liquidity in projects.2Republicworld
  • RBI cut the Cash Reserve Ratio (CRR) by 100 basis points, injecting Rs 2.5 trillion liquidity into the banking system to spur credit growth and boost sentiments in rate-sensitive sectors.IndiatodayLivemintRepublicworld
  • US-India trade talks have been extended as both sides seek consensus on tariff cuts in farming and auto sectors, aiming to finalize an interim deal before the July 9 deadline.Moneycontrol1
  • Market experts predict continued positive bias for Indian markets supported by RBI's rate cut and optimism surrounding the US-India trade deal talks.MoneyMoneycontrol2
Key Stats at a Glance
RBI repo rate after cut
5.5%
1
RBI repo rate cut
50bps
1
Bank of Baroda lending rate after cut
8.15%
Cnbctv18
Punjab National Bank lending rate after cut
9.10%
Cnbctv18
Punjab National Bank lending rate before cut
9.60%
Cnbctv18
Bank of India lending rate after cut
8.75%
Cnbctv18
Sensex gain on RBI rate cut day
746.95 points
Money
Sensex closing level
82,188.99 points
Money
FII equity purchases on Friday
Rs 1,009.71 crore
Money
RBI CRR cut
100bps
Livemint
Liquidity injected via CRR cut
Rs 2.5 trillion
Republicworld
US-India trade deal deadline
July 9
1
Nifty 50 gain on June 6
1%
1
Nifty gain on RBI cut day
252 points
M
Nifty closing level
25,003 points
M
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