RBI's Rate Cut Spurs Nifty To Test 25,000 Bank Nifty Hits Fresh Record: SEBI Ras Bullish On Banks And Realty

Indian benchmark indices witnessed a strong rebound on Friday after the Reserve Bank of India (RBI) slashed repo rates by 50 basis points and the cash reserve ratio by 100 basis points. 

Sensex rebounded with nearly 1% gain, while Nifty 50 index soared more than 250 points to test the 25,000 mark briefly. 

The India Volatility Index (VIX), a key gauge of market fear, dropped nearly 8% from day's high, while the Nifty Bank index surged 1.5%

SEBI-registered analyst Varunkumar Patel observed that the RBI's repo rate cut decision has given the economy a big boost. 

On the daily chart, the Nifty Bank index has decisively crossed 56,000 after nearly one month of consolidation. Patel is bullish on the index and expects it to surge to 58,000 within 10 days.

Analyst Kapil Aggarwal maintains a bullish outlook for the Nifty PSU Bank index. He noted that despite the broader rally in the banking sector since the March-April lows, the PSU bank index lagged its private peers. 

Aggarwal expects this trend to reverse, with the Nifty PSU Bank index gaining momentum in the coming weeks, citing the RBI's rate cut and liquidity measures supporting the sector.

Following the surprise repo and CRR rate cut, analysts have highlighted the rationale behind the rally in rate-sensitive sectors like banking, auto, and real estate.

Lower interest rates translate to cheaper home, auto, and personal loans, providing relief to the borrowers and increasing their disposable income. 

Banks are also likely to pass on the benefits to customers by revising their lending rates downward, which will help revive demand across sectors.

Analyst Sharpely expects banks and NBFCs to see improved credit demand as borrowing becomes more affordable, potentially enhancing their margins.

Real estate stocks are expected to rally as lower EMIs improve affordability, driving demand and property sales. 

They added that the auto sector is expected to benefit from cheaper financing, and the infrastructure and cement sectors could see more capex activity as liquidity improves.

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