Bank Nifty crosses 56,000 to hit record high as RBI rate decision loomsBank Nifty crosses 56,000 to hit record high as RBI rate decision loomsBank Nifty crosses 56,000 to hit record high as RBI rate decision looms

Time of India

5 days ago

India's Nifty Bank index crossed the 56,000 mark for the first time on Tuesday, buoyed by gains in lenders such as
HDFC Bank
and
State Bank of India
, as investors positioned themselves ahead of an expected interest rate cut by the Reserve Bank of India (RBI) later this week. However, the index failed to hold its early gains and slipped into the red by mid-morning.
The
banking index
surged to a lifetime high of 56,161.40 at the open, but was trading 0.1% lower by 9:50 a.m., reflecting profit-taking and weakness in major constituents.
Early optimism was fueled by strong buying in
AU Small Finance Bank
,
Federal Bank
,
Punjab National Bank
, HDFC Bank, and
IndusInd Bank
, which rose between 0.4% and 1.2%. However, larger lenders including
ICICI Bank
,
Axis Bank
, and
Kotak Mahindra Bank
weighed on the index, falling up to 0.9%.
Despite the intraday pullback, the Nifty Bank index remains one of the top performers in 2025, having gained 10% so far this year. It has delivered a 9.7% return over the past 12 months and is up 15% from its 52-week low, underscoring growing investor confidence in the sector's outlook.
RBI rate cut in focus
Live Events
Gains in rate-sensitive banking stocks have been supported by expectations that the RBI will reduce the benchmark lending rate by 25 basis points at its upcoming Monetary Policy Committee (MPC) meeting on June 6.
Under Governor Sanjay Malhotra, the RBI has already cut the repo rate by 50 basis points over its last two meetings, bringing it down from 6.5% to 6%. Market economists widely anticipate another rate cut this week, continuing the current easing cycle.
'Since the MPC is expected to cut the policy rate by 25 bps in the meeting on the 8th, rate-sensitives are likely to be favoured in the coming days,' said Dr. VK Vijayakumar, Chief Investment Strategist at
Geojit Financial Services
, citing declining inflation and supportive macroeconomic conditions as enablers of further policy action.
Adding to the optimism, India posted a robust GDP growth of 7.4% in the March quarter of FY25, reinforcing confidence in the country's economic momentum.
'This is the strongest quarterly growth in FY25, accelerating from a 6.2% expansion in Q3. India's economy grew 6.5% in FY25, in line with estimates, reaffirming its status as the world's fastest-growing major economy,' said Dr. Manoranjan Sharma, Chief Economist at Infomerics Valuations and Ratings.
With rate-sensitive stocks in focus ahead of the RBI decision, traders and investors are closely watching for signals that could either extend the rally or trigger a reversal, depending on the central bank's tone and forward guidance.
Also read |
Why is it the perfect time to invest in Nifty 200 Momentum 30 Index?
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
ETMarkets WhatsApp channel
)