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Economic Times
2 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
2 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.
Time of India
2 days ago
- Business
- Time of India
Bank, NBFC stocks cheer RBI's 50 bps bonanza, but are rate cuts delivering?
The Reserve Bank of India 's (RBI) significant 50 basis point repo rate cut on Friday sent a wave of enthusiasm through the markets, particularly benefiting the rate-sensitive banking and NBFC stocks. This positive sentiment was clearly reflected in the Nifty Bank index, which surged to a fresh lifetime high of 56,238.10 during the policy announcement, climbing almost 1% on Friday. The Nifty Financial Services index also saw a similar upward trajectory, reflecting the broad-based positive impact across the financial sector. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like O que há de novo no tratamento da impotência em 2025? Tratamento para disfunção erétil | Links Patrocinados Undo Today's revision takes the total rate cut to 100 bps, bringing the repo rate to 5.5% All 12 stocks in the Nifty Bank index were trading in the green, with IDFC First Bank as the top gainer at 2%. The Nifty PSU Bank was also 1% higher around 10:45 am, with Bank of Baroda (BoB) taking the lead of over 2%. Lower interest rates are expected to bring the cost of credit down, likely enabling higher credit demand. Other rate-sensitive sectors like auto and realty lapped the announcement with glee. The Nifty Auto index shot up by 0.9% around this time despite being down by 0.30% ahead of the policy announcements. Meanwhile, the Nifty Realty index gained more than 2%, extending its gains. Live Events Reacting to the development, Anil Rego, Founder & Fund Manager at Right Horizons PMS, said that the RBI Monetary Policy Committee (MPC) delivered a front-loaded 50 basis point repo rate cut while shifting its policy stance from accommodative to neutral. "This marks a key turning point in India's monetary approach, signalling a move from active easing to a more balanced, data-dependent stance amid rising global uncertainties and volatile capital flows," he added. Divam Sharma, Founder & Fund Manager at Green Portfolio PMS, called the magnitude of the cut "significant". "This move is likely to enhance liquidity in the system, making borrowing cheaper and encouraging companies to pursue capital expenditure," he said. Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP at Maharashtra chapter of NAREDCO, said that the cut is strong and timely amid early signs of demand moderation in the residential sector." Lowering the repo rate to 5.5% will have a cascading effect across the lending ecosystem, bringing home loan interest rates well below 7.75%—a highly encouraging development for both existing and prospective homebuyers," Yagnik added. Banks/NBFCs stock performance amidst rate cuts since Feb 2025 policy Since February 7, 2025, the date of the year's inaugural monetary policy announcement by the Indian central bank, an ETMarkets analysis of 95 stocks reveals a significant market response: 63 of these stocks have yielded positive returns, climbing as high as 63%. This policy meeting was particularly noteworthy as it marked the first interest rate cut in five years under the leadership of the new Governor, Sanjay Malhotra. The top three stocks are NBFCs, followed by a PSU bank. Worth Investment & Trading Co, Aditya Birla Capital, SBFC Finance and Union Bank Of India lead the pack with returns of 63%, 33%, 33% and 28%, respectively. There are 35 other stocks which have given double-digit returns between 27% and 10% in the same period. Among the most widely tracked stocks are IDBI Bank, RBL Bank, Canara Bank, Bajaj Holdings & Investment, SBI Cards And Payment Services, JIO Financial Services, Shriram Finance, ICICI Bank, Bank of Baroda (BoB), Manappuram Finance, Axis Bank, HDFC Bank and Tata Investment Corporation. The other 24 stocks have yielded returns in single digits. The Jammu & Kashmir Bank, Tamilnad Mercantile Bank and Arman Financial Services are at the lower end of the ladder with 1-2% returns. Heavyweights like the State Bank of India (SBI), Kotak Mahindra Bank, Bajaj Finance, Yes Bank, Punjab National Bank (PNB) and IDFC First Bank have yielded between 5% and 9%. There are laggards too, as 32 stocks have slipped in the red since the first RBI policy announcement in February this year. In this, 17 stocks have seen a double-digit decline between 10% and 52%. The biggest decline was seen in Ashika Credit Capital Finance, followed by Punjab & Sind Bank (PSB) and Paisalo Digital. Both PSB and Ashika have fallen 31% and 29%, respectively. The stocks with a market capitalisation of Rs 500 crore or more have been taken into account. The article does not analyse the reasons for losses or gains in specific stocks, but a larger trend in the banks and NBFCs. There could be company-specific issues behind their gains or losses. Read more: Private lenders disappoint in Q4FY25, but small and PSU banks impress. HDFC Bank, SBI among 16 stocks to buy For instance, IndusInd Bank's corporate governance issues and losses in its derivative segment triggered a fall in the counter. Since February 7, its fall has been to the tune of 25%. The Q4FY25 is also a factor in the way stocks have performed. India's banking sector delivered a mixed performance in Q4FY25, with profit growth diverging sharply across private, public, and small finance banks. While sector heavyweights like HDFC Bank and ICICI Bank posted modest to healthy growth, State Bank of India (SBI), Kotak Mahindra Bank, and Axis Bank reported disappointing numbers. Moreover, a few mid-sized and small banks surprised the Street with explosive profit figures. Nifty Auto has remained flat in this period, weighed down by Trump tariff uncertainties and mixed earnings. Read more: Auto Q4FY25 Wrap: Two-wheelers lead PAT surge with TVS Motor, Eicher in front; top 13 counters to buy The realty sector has fared better with the Nifty Realty index delivering an over 8% uptick. (Data Inputs by Ritesh Presswala) ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
India Today
2 days ago
- Business
- India Today
RBI cuts repo rate again: 5 key takeaways you must know
In a move that's likely to cheer borrowers, the Reserve Bank of India (RBI) lowered the repo rate on Friday, as global economic uncertainty decision came after the central bank's Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, wrapped up its three-day meeting that began on June 4. The meeting was closely watched by economists, businesses, and are five key takeaways from the June 2025 RBI policy meeting, explained in simple RATE REDUCED TO 5.5% — THIRD CUT IN A ROW This is the third straight time the RBI has cut rates this year. After a 25 basis point cut in April, it has now gone a step further with a 50 basis point reduction. The repo rate is now 5.5%. This means loans, especially home and personal loans, could get cheaper if banks pass on the benefit to to Divam Sharma - Founder & Fund Manager at Green Portfolio PMS, "Although a 25bps rate cut was already priced in by the markets, a 50bps cut comes as a surprise. The unanimous decision is along expected lines, but the magnitude of the cut is significant. This move is likely to enhance liquidity in the system, making borrowing cheaper and encouraging companies to pursue capital expenditure."advertisementHe added, "Such investment could benefit the economy in the long term, particularly in an environment where trade wars and geopolitical realignments are becoming more pronounced than pandemic-related disruptions."OTHER KEY RATES ALSO ADJUSTEDFollowing the repo rate cut, the RBI has also lowered the Standing Deposit Facility (SDF) rate to 5.25% and the Marginal Standing Facility (MSF) and Bank Rate to 5.75%. These rates help banks manage short-term money needs and play a role in controlling liquidity in the GROWTH FORECASTLooking ahead, the Indian economy is expected to stay on track in 2025–26, helped by steady consumer spending and rising investments in infrastructure. Strong rural activity should boost demand in villages, while the growing services sector is likely to support urban is set to rise due to better corporate finances, higher factory use, and government spending. While trade uncertainties remain a concern for exports, recent progress on trade deals, including the FTA with the UK, is a positive the supply side, a good monsoon and healthy farm-related sectors point to a strong agricultural outlook. But global tensions, weather changes, and trade risks may slow things down. Overall, GDP growth for 2025–26 is expected to be 6.5%, with quarterly growth ranging from 6.3% to 6.7%.advertisementSharma said, "The ongoing momentum in domestic consumption, corporate activity, and GDP growth will help sustain the economic trajectory and is a positive signal for the markets."SHIFT TO NEUTRAL STANCESince February 2025, the RBI has slashed the repo rate by a full 100 basis points. With this sharp reduction, it believes there's now less room left to cut rates further to support growth. So, the RBI has changed its policy stance from 'accommodative' to 'neutral'. In simple words, this means they're now more cautious and will wait and watch before making further Sharma said, "The additional 100bps cut in CRR is also a positive step, as it encourages banks to lend more freely. With FPI inflows slowing down, this infusion of liquidity is a timely and welcome move."INFLATION FORECAST REVISED FOR THE YEARCPI-based inflation has been softening, reaching 3.2% in April 2025, the lowest it's been in almost six years. This decline has been led by falling food prices, which have dropped consistently for six months. On the other hand, LPG price hikes pushed fuel prices up slightly. Still, the inflation outlook has improved, with the RBI lowering its forecast for 2025–26 to 3.7% from 4%.advertisementAssuming normal rainfall, the RBI now expects inflation to be 2.9% in Q1 (April–June), 3.4% in Q2 (July–September), 3.9% in Q3 (October–December), and 4.4% in Q4 (January–March)."The inflation projection at 3.7% also looks promising and gives further thrust to the growth push. This is a fantastic step by the RBI as we see headwinds emerging for corporates due to geopolitical tensions and global trade disruptions," noted Watch
Reuters
2 days ago
- Business
- Reuters
Indian shares set to open higher ahead of RBI policy decision
June 6 (Reuters) - Indian shares are set to open higher on Friday, ahead of the Reserve Bank of India's (RBI) policy announcement, where a rate cut is widely anticipated. The Gift Nifty futures were trading at 24,842 as of 7:21 a.m. IST, indicating that the benchmark Nifty 50 (.NSEI), opens new tab will open above Thursday's close of 24,750.90. The RBI is expected to cut its key lending rates by 25 basis points (bps) for the third consecutive meeting in its policy decision at 10:00 a.m. IST. While a 25 bps rate cut is likely, markets are looking for a stronger growth focus from the RBI to boost consumption and support domestic businesses, said Divam Sharma, co-founder and fund manager at Green Portfolio PMS. While the GDP growth for the fourth quarter came in at 7.4%, broadly in line with expectation, the gross value added print, which came in at 6.8%, better reflects the state of the economy, according to HSBC. The Nifty and BSE Sensex (.BSESN), opens new tab rose about 0.5% each on Thursday, with rate-sensitive sectors such as realty and financials leading the gains. The benchmarks are roughly 6% shy of the record highs hit in late September 2024. Other Asian markets opened little changed, while Wall Street equities closed lower overnight as a high-profile dispute between U.S. President Donald Trump and billionaire Elon Musk weighed.
