Sensex, Nifty: What stock market experts say on RBI rate cut; BFSI stocks to watch

Benchmarks Sensex and Nifty were down half-a-per cent each in Wednesday's trade, as the RBI went ahead with a 25-bp rate cut to support the slowing economy. The RBI cut its GDP forecast for the ongoing financial year and cited uncertainties regarding tariff wars globally. Here's what stock market experts and economists said on the rate cut:

Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS
During the rate easing cycle, CASA ratios generally improve for banks. This has not been the case in Q4, with deposit growth being led by both CASA and TDs based on the provisional updates released by banks thus far. 

"We expect the transmission on the CoF side to be slower vs the pace of transmission on the yields. Regarding margins for banks, we expect the full impact of the rate cut to reflect from Q1FY26, with a partial impact visible in Q4. We believe NBFCs like Bajaj Finance, Shriram Finance, SBI Cards and Cholamandalam would benefit not only from the rate cuts but also from the RBI’s decision to roll back the higher risk weight on bank loans to NBFCs,"  Kulkarni said.

Amongst banks, he preferred large private banks like HDFC Bank, Kotak Bank and ICICI Bank.

Umeshkumar Mehta, CIO, SAMCO Mutual Fund
The RBI’s Monetary Policy outcome was inline with consensus estimates and a 25 bps rate cut should augur well both for the financial system and the economy. Given the ongoing tariff war across the world, an accommodative stance along with a stable inflationary scenario would ensure buoyant credit growth and support our domestic environment. 

The rate cut is indeed positive for our bond markets but the ongoing pressure on the US bond yield restricts the full extent of the impact in India.

Indranil Pan, Chief Economist at YES Bank
The RBI has delivered what the market expected – a 25-bps cut and a change in stance to “accommodative”. It was also explained that being “accommodative” means that there would be no chance of a rate hike at this point, even as the RBI stays vigilant with the evolving macro scenario of tariff wars and geopolitical risks. 

Both inflation and growth forecasts were lowered by 20 bps. There were no fresh liquidity measures that were announced in this policy. The space for policy rate cuts were predicated by a decisive change in the inflation outlook, led by food prices and more specifically vegetable prices. 

"Given a 4% inflation target, the scope of pushing repo rate down to 5.50% in this cycle has opened. Consequently, we expect the RBI to cut in June and also in August," Pan said.

Rajeev Radhakrishnan, CIO - Fixed Income, SBI Mutual Fund
A shift to accommodative stance, notwithstanding the earlier reference to global uncertainties has been the key takeaway. Effectively the key message is the unambiguous focus on domestic growth and the confidence that forward looking inflation is likely to be aligned closer to the policy target of 4 per cent. Alongside the demonstrated commitment to address liquidity dynamics, the policy stance clearly opens up the likelihood of additional rate cuts in this cycle.

Murthy Nagarajan, Head-Fixed Income, Tata Asset Management
RBI seems to be comfortable with currency depreciation in the coming months. RBI has reduced its GDP growth forecast to 6.5 from 6.7 percent and CPI inflation has been revised to 4 from 4.2 percent. IT highlighted future expectation of CPI over a 3 and 6 month time frame is lower. The governor highlighted lower commodity prices specially oil prices due to tariff war and on the growth downside due to lower investments by companies. 

"RBI made it clear they will provide liquidity in the banking system to support growth Rate cuts in India is expected to be deeper to support growth as CPI inflation is below target of 4 percent for most of the year as per RBI projections. The terminal rate on repo can go towards 5.25 levels from 6 percent at present. The ten-year yields can move towards 6 to 6.25 percent in the coming years as globally growth slows down," Nagarajan said.