Indian Stocks on Track for Record High After RBI's Liquidity Boost

Indian stocks are expected to surge to a new record high due to the Reserve Bank of India's liquidity boost. The central bank slashed the cash reserve ratio and delivered a bigger-than-expected rate cut, unlocking around $29 billion in banking liquidity by year-end. Analysts predict the benchmark NSE Nifty 50 Index will break its lifetime peak set in September.

Indian stocks are expected to surge to a new record high following the Reserve Bank of India's (RBI) recent monetary policy decision. The central bank slashed the cash reserve ratio (CRR) and delivered a bigger-than-expected rate cut, unlocking around $29 billion in banking liquidity by year-end. Analysts predict the benchmark NSE Nifty 50 Index will break its lifetime peak set in September.

The RBI, in its latest policy meeting on June 6, cut the repo rate by 50 basis points to 5.50% and the CRR by 100 basis points to 3%. This move is expected to release ₹2.5 lakh crore of liquidity into the banking system by the end of November 2025 [1]. The MPC also revised its FY26 Consumer Price Index (CPI) inflation forecast down to 3.7% from the original 4% and maintained its GDP growth forecast for the fiscal year 2026 at 6.5% [1].

Indian equity markets responded positively to the announcements. The benchmark indices rose by nearly 1%, while the Nifty Bank index surged 0.8% to hit a fresh record high [2]. The Nifty 50 rose 0.94% to 24,982.25, while the BSE Sensex traded 0.9% higher at 82,163.22 as of 11:17 a.m. IST [2]. The decision to cut the CRR requirement for lenders will increase the banking system liquidity by 2.5 trillion rupees, ensuring sufficient liquidity in the system in the near future [2].

Analysts have hailed the decision as a timely yet balanced intervention that supports growth without compromising on macroeconomic stability. Mahendra Patil, founder and managing partner at MP Financial Advisory Services, stated, "It is a timely yet balanced intervention by the RBI that supports growth without compromising on macroeconomic stability" [2].

The rate-sensitive sector realty gained 3.5% while the auto sector added 1%, as the rate cut fuelled growth expectations [2]. High-weight financials erased early losses, rising 2% and hitting a record high [2]. The heaviest stock in Indian benchmark indexes, private lender HDFC Bank, gained 2% [2].

Non-bank lender Bajaj Finance jumped 4.2% after RBI governor Sanjay Malhotra said stress in unsecured loans and credit cards has eased even if pressure continued to persist in the microfinance segment [2]. Ashok Leyland gained 3.4% after Morgan Stanley reiterated "overweight" and hiked its target price [2].

The decision to cut rates and reduce the CRR is expected to boost economic growth and support businesses by increasing liquidity in the banking system. Investors and financial professionals are closely watching the RBI's forward guidance and future policy decisions to gauge the central bank's rate easing trajectory.

References:
[1] https://stocktwits.com/news-articles/markets/equity/india-markets-edge-higher-as-rbi-cuts-repo-and-crr-projects-lower-inflation/chkz0KJRbxm
[2] https://www.marketscreener.com/quote/index/NIFTY-50-9743680/news/Financials-realty-boost-Indian-shares-after-RBI-s-steep-rate-cut-50173448/