Rate-Sensitive Sectors Poised for Growth Amid Easing Interest Rates
Sectors such as banking, NBFCs, real estate, and automobiles are set to benefit from the current easing interest rate environment, according to a report by Nexedge Research. Lower borrowing costs are expected to boost credit flow, reduce financing costs, and improve demand conditions.
Interest RatesReal EstateBanking SectorNbfcsAutomobile SectorReal Estate NewsJun 07, 2025
It said, 'Banking, NBFCs, real estate, and automobiles are well positioned to benefit from lower borrowing costs.' The report also noted that the Indian economy is entering a phase marked by benign inflation and ample liquidity, creating a sustained low-interest rate backdrop. This is already evident in the falling money market rates and a notable softening in the 10-year government bond yield.
The decline in yields has boosted bond prices and improved return prospects for fixed-income investors. It said, 'Money market rates and bond yields are trending lower, with the 10-year G-sec yield already softening, boosting bond prices and supporting fixed-income returns.'
The report highlighted that inflation is currently hovering near the lower end of the Reserve Bank of India's (RBI) target range of 2-6 per cent. With the RBI maintaining a neutral policy stance, the market is beginning to price in the possibility of further rate cuts. This combination of falling inflation and proactive monetary easing is seen as supportive for both equity and bond markets.
The report suggested that these factors together are strengthening the medium-term macro outlook, offering a positive backdrop for investors and further momentum for India's economic growth. The RBI's Monetary Policy Committee on Friday cut the repo rate by 50 basis points to 5.50 per cent (from 6.00 per cent). This larger-than-expected cut marks the third consecutive reduction in 2025, totalling 100 bps of easing since February.
Consequently, the Standing Deposit Facility (SDF) rate stands adjusted at 5.25 per cent, and the Marginal Standing Facility (MSF) rate and Bank Rate are set at 5.75 per cent. The RBI has also reduced CRR by 100 bps (from 4 per cent down to 3 per cent) to augment durable liquidity in the banking system.
This CRR cut will be implemented in phases beginning September 6, October 4, November 1 and November 29, 2025, and is expected to release roughly Rs 2.5 trillion of liquidity by November 2025, bolstering bank lending capacity.
Frequently Asked Questions
Which sectors are expected to benefit from the easing interest rate environment?
Sectors such as banking, NBFCs, real estate, and automobiles are expected to benefit from the easing interest rate environment.
What are the key factors supporting the bond market and fixed-income returns?
The key factors supporting the bond market and fixed-income returns are the falling money market rates and the softening 10-year government bond yield.
How does the RBI's recent repo rate cut impact the economy?
The RBI's recent repo rate cut of 50 basis points to 5.50 per cent is expected to boost credit flow, reduce financing costs, and improve demand conditions in various sectors.
What is the current inflation range targeted by the RBI?
The current inflation range targeted by the RBI is 2-6 per cent.
How much liquidity is expected to be released by the CRR cut?
The CRR cut is expected to release roughly Rs 2.5 trillion of liquidity by November 2025, bolstering bank lending capacity.
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