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Business Recorder
4 days ago
- Business
- Business Recorder
India's benchmark Nifty 50 logs best day in three weeks on RBI's bumper policy support
India's benchmark Nifty 50 logged its best day in three weeks as investors rallied behind the central bank's bumper policy measures. The Reserve Bank of India (RBI) cut the key lending rate by 50 basis points, exceeding the widely expected 25 basis point reduction. It also unexpectedly reduced the cash reserve ratio (CRR) requirement for banks by 100 bps and shifted its policy stance to neutral from accommodative. The Nifty 50 and the BSE Sensex added about 1% on the day and for the week to close at 25,003.05 and 82,188.99, respectively. The benchmarks also recorded their first weekly gain after two straight weeks of decline. 'This is not business-as-usual monetary policy. It is a deliberate realignment based on a rare convergence of falling inflation, stable external accounts, and the need to pre-empt global slowdown spillovers,' said Arsh Mogre, economist at PL Capital. The CRR cut is expected to boost banking liquidity by 2.5 trillion rupees, on top of the existing surplus of 3 trillion rupees, Barclays said. This liquidity boost is expected to lower the cost of funding for banks and spur credit growth, powering rate-sensitive stocks. All 13 sub-sectors climbed. Financials jumped 1.8% on the day to hit record highs, with heavyweight HDFC Bank touching a lifetime high level after an 1.5% surge. Non-bank lender Bajaj Finance gained 4.9%. Reliance, rate-sensitive sectors lead Indian shares higher, RBI decision in focus Real estate stocks soared 4.7% and automobile stocks added 1.5%. The smallcaps and midcaps gained 0.8% and 1.2%, respectively. 'Excess liquidity tends to find its way into capital markets, especially in an environment of declining savings and deposit rates,' said Apurva Sheth, head of market perspectives and research at SAMCO Securities. Bucking the trend, some railway stocks, including RailTel Corporation of India and RITES, slipped on the day after Kotak Institutional Equities said the recent surge in stocks contrasted their fundamentals.
Economic Times
4 days ago
- Business
- Economic Times
Bajaj Finance shares jump 5% after RBI cuts repo rate by 50 bps, CRR by 100 bps
Shares of Bajaj Finance jumped 5.5% to hit an intraday high of Rs 9,425.5 on the BSE in Friday's trade, as the Reserve Bank of India's 50 basis point repo rate cut and 100 basis point CRR cut sparked broad optimism in the lending sector, especially among non-banking financial companies (NBFCs). ADVERTISEMENT While the aggressive repo rate cut is expected to weigh on net interest margins (NIMs) for banks in the near term, the RBI's simultaneous move to reduce the Cash Reserve Ratio (CRR) by 100 bps, unlocking Rs 2.5 lakh crore of liquidity, has emerged as a game-changer for the credit ecosystem. For NBFCs like Bajaj Finance, which rely on borrowing from banks and capital markets to fund lending, this dual move of easing both rates and liquidity is expected to lower funding costs and support loan growth. Analysts noted that NBFCs stand to benefit disproportionately from the rate cut as falling interest rates reduce borrowing costs, enabling lenders to offer more competitive loan products and expand their credit books. Also read: RBI's bazooka sends Sensex, Nifty soaring. What does it mean for stock market investors 'This move is likely to enhance liquidity in the system, making borrowing cheaper and encouraging companies to pursue capital expenditure,' said Divam Sharma, Founder of Green Portfolio PMS. 'With FPI inflows slowing down, this infusion of liquidity is a timely and welcome move.' ADVERTISEMENT According to Arsh Mogre, Economist at PL Capital, 'By lowering both the price (repo) and quantity (CRR) of money, the RBI has flattened the transmission curve. The CRR cut in particular offsets short-term pressures on margins from falling lending rates.'For a lender like Bajaj Finance, improved liquidity and falling interest rates are likely to aid credit disbursal, support margins, and revive consumption-led demand, especially in retail and SME segments. ADVERTISEMENT 'Tailwinds for NIMs from improving systemic liquidity and deposit rate cuts are visible,' said Naveen Kulkarni, CIO at Axis Securities he said, even as H1FY26 will see a more pronounced impact of the rate cut on NIMs, some respite is expected over H2FY26. ADVERTISEMENT 'Asset quality concern appears to be steadily waning with unsecured segment stress showing gradual signs of stability, while the secured segment asset quality continues to hold up well. At present, we would prefer banks with promising growth prospects, healthy deposit franchises, stable asset quality metrics and strong and steady management teams.' Also read: RBI slashes rates by 50 bps: What it means for debt mutual fund investors ADVERTISEMENT With the RBI maintaining a neutral stance and indicating scope for further easing if inflation remains benign, NBFCs and banking companies could continue to benefit from the evolving rate cycle. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
4 days ago
- Business
- Time of India
Bajaj Finance shares jump 5% after RBI cuts repo rate by 50 bps, CRR by 100 bps
Shares of Bajaj Finance jumped 5.5% to hit an intraday high of Rs 9,425.5 on the BSE in Friday's trade, as the Reserve Bank of India's 50 basis point repo rate cut and 100 basis point CRR cut sparked broad optimism in the lending sector, especially among non-banking financial companies (NBFCs). While the aggressive repo rate cut is expected to weigh on net interest margins (NIMs) for banks in the near term, the RBI's simultaneous move to reduce the Cash Reserve Ratio (CRR) by 100 bps, unlocking Rs 2.5 lakh crore of liquidity, has emerged as a game-changer for the credit ecosystem. For NBFCs like Bajaj Finance, which rely on borrowing from banks and capital markets to fund lending, this dual move of easing both rates and liquidity is expected to lower funding costs and support loan growth. Analysts noted that NBFCs stand to benefit disproportionately from the rate cut as falling interest rates reduce borrowing costs, enabling lenders to offer more competitive loan products and expand their credit books. Also read: RBI's bazooka sends Sensex, Nifty soaring. What does it mean for stock market investors 'This move is likely to enhance liquidity in the system, making borrowing cheaper and encouraging companies to pursue capital expenditure,' said Divam Sharma, Founder of Green Portfolio PMS. 'With FPI inflows slowing down, this infusion of liquidity is a timely and welcome move.' According to Arsh Mogre, Economist at PL Capital, 'By lowering both the price (repo) and quantity (CRR) of money, the RBI has flattened the transmission curve. The CRR cut in particular offsets short-term pressures on margins from falling lending rates.' For a lender like Bajaj Finance, improved liquidity and falling interest rates are likely to aid credit disbursal, support margins, and revive consumption-led demand, especially in retail and SME segments. 'Tailwinds for NIMs from improving systemic liquidity and deposit rate cuts are visible,' said Naveen Kulkarni, CIO at Axis Securities PMS. However, he said, even as H1FY26 will see a more pronounced impact of the rate cut on NIMs, some respite is expected over H2FY26. 'Asset quality concern appears to be steadily waning with unsecured segment stress showing gradual signs of stability, while the secured segment asset quality continues to hold up well. At present, we would prefer banks with promising growth prospects, healthy deposit franchises, stable asset quality metrics and strong and steady management teams.' Also read: RBI slashes rates by 50 bps: What it means for debt mutual fund investors With the RBI maintaining a neutral stance and indicating scope for further easing if inflation remains benign, NBFCs and banking companies could continue to benefit from the evolving rate cycle.
