Sensex Soars 800 Points, Nifty Crosses 25,000 as RBI Cuts Rates, Boosts Liquidity
In a decisive move that electrified Indian stock markets, the Reserve Bank of India (RBI) slashed key interest rates and announced measures to infuse liquidity, triggering a powerful rally on Friday, June 6, 2025. The BSE Sensex skyrocketed over 800 points to reclaim the 82,000 mark, while the Nifty 50 vaulted past the psychological 25,000 level.
In a surprise that caught markets off-guard, the central bank slashed the repo rate by a sharper-than-expected 50 basis points, bringing it down to 5.5%. The RBI also pivoted its stance from ‘Accommodative’ to ‘Neutral’, signaling a potential end to the rate-cutting cycle. But the monetary policy bonanza didn’t stop there.
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In a move aimed at pumping liquidity into the financial system, the RBI announced a substantial 100 basis point reduction in the Cash Reserve Ratio (CRR). This cut will be implemented in four stages, providing a steady stream of funds to banks for lending.
Rate-sensitive sectors basked in the glow of the RBI’s generosity. The Nifty Realty index vaulted 3%, while the Nifty Bank and Nifty Auto indices climbed 1.5% and 1%, respectively. In a historic first, the Nifty Bank index soared to an all-time high of 56,433. Not to be outdone, the Nifty Financial Services index rose 1.89% to its own record high of 26,885.8.
HDFC Bank Hits Record High
Amidst the euphoric rally, HDFC Bank emerged as a standout performer. The banking behemoth saw its share price surge 2.01% to a record high of Rs 1,988, as investors cheered the prospect of improved margins and loan growth in the wake of the RBI’s moves.
A Shot in the Arm for the Economy?
Market watchers believe the RBI’s aggressive rate cut and liquidity measures could provide a much-needed boost to the Indian economy, which has been grappling with slowing growth and weak consumer sentiment. Lower borrowing costs could spur demand for homes, vehicles, and consumer goods, while the infusion of liquidity may encourage banks to lend more freely to businesses and individuals.
However, some analysts caution that the RBI’s actions alone may not be enough to engineer a swift economic turnaround. They point to structural challenges, such as a stressed banking sector and sluggish private investment, that may take time to resolve.
As the dust settles on a momentous day for Indian markets, investors will be closely watching economic data and corporate earnings in the coming weeks to gauge whether the RBI’s bold moves can indeed kindle a sustained rally and put the economy back on a higher growth trajectory.
