Auto and Real Estate Stocks Soar Up to 4% on RBI's Major Liquidity Boost
The Reserve Bank of India's (RBI) recent policy move, including a 50-basis-point repo rate cut, has given a significant boost to rate-sensitive sectors like auto and real estate. Here are 8 key stocks to watch.
Repo RateAuto StocksReal Estate StocksRbiMarket IndicesReal Estate NewsJun 06, 2025
Both benchmark indices, the Sensex and Nifty, which opened the day on a quiet note, saw a sharp upward move post the announcement. At the time of writing, the Sensex had jumped over 600 points to 82,067.34, while the Nifty Bank index surged more than 200 points, trading around 24,971.65.
“The higher-than-expected 50bp rate cut decision by the MPC, though positive for growth, is slightly negative from the market perspective for the near-term. This big rate cut is, as the RBI Governor remarked, front-loading of the rate cut. 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 credit growth that this rate cut will hopefully stimulate will compensate for the dip in margins,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Auto Stocks in Top Gear on Hopes of Sales Boost
The Nifty Auto index zoomed over 1% after the policy announcement, trading at 23,528.60. Lower interest rates typically make car and two-wheeler loans more affordable, which may boost demand.
Stocks such as Ashok Leyland rose nearly 3%, while Hero MotoCorp gained over 2%. Other notable gainers included Bajaj Auto, Motherson, and Bharat Forge, all of which were trading firmly in the green.
Real Estate Stocks Surge on Higher Demand Hopes
Homebuyers might have something to cheer for too. The Nifty Realty index surged over 3.5%, hitting 1,028 levels, as the rate cut is expected to lower home loan EMIs and revive housing demand.
“A rate cut, while widely anticipated in some quarters, comes as a welcome move for the real estate sector. Lower borrowing costs will positively influence affordability and purchasing decisions, particularly in the budget and mid-income segments. While luxury homebuyers are typically not driven by EMIs or interest rates, a softening monetary policy signals broader economic confidence. Overall, a rate cut acts as a confidence marker, even if its direct impact on the luxury segment is limited,” said Ramani Sastri, Chairman & MD, Sterling Developers.
Among the top performers were Godrej Properties, DLF, Oberoi Realty, Prestige, and Sobha, with gains ranging between 4% and 5%. The only laggard in the pack was Raymond, which stayed in the red.
RBI Delivers the Third Rate Cut in 2025
The RBI’s Monetary Policy Committee (MPC) cut the repo rate, the key lending rate for commercial banks, to 5.5% from 6%, a 50-bps cut. According to the RBI, the Standing Deposit Facility (SDF) rate now stands at 5.25%, while the Marginal Standing Facility (MSF) and Bank Rate have been adjusted to 5.75%.
This is the third consecutive rate cut in 2025, bringing the total reduction this year to 100 basis points.
Frequently Asked Questions
What is the repo rate and why is it important?
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term money to banks. A lower repo rate makes borrowing cheaper for banks, which can pass on the benefits to consumers in the form of lower interest rates on loans.
How does a repo rate cut impact the stock market?
A repo rate cut generally boosts the stock market, especially rate-sensitive sectors like autos and real estate. Lower interest rates can lead to increased consumer spending and borrowing, which can drive demand and boost stock prices.
Which sectors are most affected by a repo rate cut?
Sectors like autos, real estate, and banking are most affected by a repo rate cut. Lower interest rates make loans more affordable, which can boost sales in these sectors.
What is the Nifty Auto index?
The Nifty Auto index is a benchmark index that tracks the performance of auto stocks listed on the National Stock Exchange (NSE). It includes companies involved in manufacturing and selling automobiles and auto components.
What is the Nifty Realty index?
The Nifty Realty index is a benchmark index that tracks the performance of real estate stocks listed on the National Stock Exchange (NSE). It includes companies involved in real estate development, construction, and property management.
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