Nifty above 24,950; metal shares shine
The higher-than-expected 50 bps rate cut decision by the MPC, though positive for growth, is slightly negative from the market perspective for the near term. The change in monetary stance from accommodative to neutral also indicates that more rate cuts are unlikely unless the situation warrants. This big rate cut will impact the margins of the banks, and therefore, bank stocks will be under pressure in the near term. However, the anticipated boost to credit growth could help offset the decline in margins over time.
Metal stocks extend gains for the third straight session.
At 12:30 IST, the barometer index, the S&P BSE Sensex, surged 737.14 points or 0.91% to 82,179.18. The Nifty 50 index jumped 241.45 points or 0.97% to 24,994.65.
In the broader market, the S&P BSE Mid-Cap index rose 0.59% and the S&P BSE Small-Cap index added 0.43%.
The market breadth was positive. On the BSE, 2,142 shares rose and 1,697 shares fell. A total of 186 shares were unchanged.
The Reserve Bank of India (RBI) cut the policy repo rate by 50 basis points to 5.50%, signaling a shift in its monetary policy stance from accommodative to neutral.
The decision, announced at the conclusion of the Monetary Policy Committees (MPC) 55th meeting held from June 4 to 6, 2025, was driven by easing inflation and a stable growth outlook.
With the rate cut coming into effect immediately, the standing deposit facility (SDF) rate now stands at 5.25%, while the marginal standing facility (MSF) rate and the bank rate are adjusted to 5.75%.
This decision is in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.
The RBI maintained its real GDP growth projection for FY26 at 6.5%, with quarterly growth seen at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.
On the inflation front, the RBI revised its forecast downward to 3.7% for FY26 from the earlier estimate of 4%. Quarterly projections suggest CPI inflation at 2.9% in Q1, 3.4% in Q2, 3.9% in Q3, and 4.4% in Q4.
The RBI cited broad-based moderation in inflation over the past six months, with headline CPI now well below target. It noted that both food and core inflation are expected to remain soft, helped by easing global commodity prices amid a global growth slowdown.
Looking ahead, the MPC emphasized a data-dependent approach, stating it will closely monitor evolving domestic and global conditions to guide future policy moves.
The minutes of the MPC meeting will be released on June 20, and the next policy meeting is scheduled from August 4 to 6, 2025.
Derivatives:
The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, shed 0.97% to 15.14.94. The Nifty 26 Jun 2025 futures were trading at 25,078.30, at a premium of 83.65 points as compared with the spot at 24,611.95.
The Nifty option chain for the 26 June 2025 expiry showed a maximum call OI of 54.1 lakh contracts at the 26,000 strike price. A maximum put OI of 53.5 lakh contracts was seen at 24,000 strike price.
Buzzing Index:
The Nifty Metal index rose 1.32% to 9,353.55. The index added 2.53% in the past three trading sessions.
JSW Steel (up 4.08%), Jindal Stainless (up 2.59%), Hindustan Zinc (up 1.91%), National Aluminium Company (up 1.67%), Welspun Corp (up 1.66%), Hindustan Copper (up 1.63%), NMDC (up 1.62%), Adani Enterprises (up 1.45%), Jindal Steel & Power (up 1.11%) and Hindalco Industries (up 1.09%) advanced.
On the other hand, Lloyds Metals & Energy (down 2.75%), Tata Steel (down 0.97%) and APL Apollo Tubes (down 0.64%) edged lower.
Stocks in Spotlight:
Max Estates rose 2.01% after its board approved a material related party transaction between Max Estates Gurgaon Two (Developer), a wholly-owned subsidiary, and Antara Senior Living (ASLL), a wholly-owned subsidiary of Max India.
Praj Industries rose 2.87% after the company secured an international assignment from Enersur SA, one of Paraguays leading renewable energy firms, to develop a fully integrated biorefinery project in the South American nation.
Brigade Enterprises rose 2.51% after the companys wholly owned subsidiary, Brigade Tetrarch, announced the incorporation of a Limited Liability Partnership (LLP) named Auraterra Developers LLP.
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