RBI Policy Outcome: Nifty Bank hits a record high, Realty stocks rally after CRR cut

Following the Reserve Bank of India's (RBI) 50 basis points repo rate cut, the Nifty Bank index scaled a new record high of 56,305. The index has recovered 800 points from its previous lows.

Shares of other rate sensitive sectors like realty and auto also saw positive movement, with gains of over 4%.

Among realty stocks, DLF, Prestige Estates Projects, Sobha, Godrej Properties, and Oberoi Realty were leading the gains.

Of the 15-pack auto index, as many as 13 stocks were trading in the green, while two were in the read.

Among banking stocks, BoB, IDFC First Bank, PNB, Axis Bank and other stocks rallied, with the index rising 1%.

The interest rate cut marked the third straight rate cut by the central bank, following two previous ones in February and April. With this, the repo rate now stands at 5.5% from 6% earlier.

In addition, the RBI has also cut its Cash Reserve Ratio (CRR) by 100 basis points. The cut in CRR will release up to ₹2.5 lakh crore liquidity in the system and reduce the cost of funding for banks, RBI Governor Sanjay Malhotra said in his address.

The Standard Deposit Facility (SDF) rate and the Marginal Standing Facility (MSF) rate have also been adjusted by 50 basis points in response to the repo rate cut.

The repo rate is the interest rate at which the central bank lends short-term funds to commercial banks.