The RBI’s surprise rate cut and simultaneous cash reserve ratio (CRR) reduction released ₹2.5 lakh crore of liquidity into the system—an unprecedented move aimed at stimulating growth, even as inflation hovers near a six-year low (around 3 %) . Initially, stock markets responded positively, with Nifty and Sensex inching upward, supported by optimism surrounding US‑China trade talks . However, profit-booking in financials, notably HDFC and ICICI banks, negated gains—highlighting mixed sentiment across sectors.
Sectoral trends reveal a cautious pattern: while IT and manufacturing show buoyancy, banking stocks falter amid compressed margins. Markets appear to be pricing in the benefits of lower borrowing costs, even as bond yields climb—10‑year G‑Sec touched ~6.68 %—pointing to liquidity normalization concerns . With the RBI shifting to a neutral stance and global factors in play (like Fed expectations), investors should stay alert—watching Indian banks, bond yields, and capital flows as indicators of policy impact.
