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Below the Comment  on RBI cutting policy rate by 50 bps by by Ajay Garg, CEO, SMC Global Securities 

RBI has announced a 50 basis points cut in repo rate to 5.50% to boost economic growth amid cooling inflation. Despite the tariff-led disruptions at the global level, the market volatility has dampened, with Indian stock markets taking a path of recovery. In the Q4 FY25, the real GDP has surpassed the previous three quarters' growth rate at 7.4%. In FY25, the real GDP growth rate stood at 6.5%, while the FY26 GDP growth projection remains steady at 6.5%.

In April 2025, CPI inflation had dropped to a nearly six-year low of 3.2%, led by the fall in food inflation. For FY26, the inflation is projected downward at 3.7%. The drop in inflation has helped the RBI to take the rate-cut route to increase domestic consumption and investment. Additionally, the RBI has also changed its stance from accommodative to neutral, signalling flexibility in policy rates based on the current economic situation and inflationary conditions.

The 50 bps repo rate cut by the RBI seems a good push to India’s economic growth as it will promote borrowing, boost investment, and foster job creation. This will reduce the interest rates and make it cheaper for people and businesses to borrow money, leading to higher spending or investment. Sectors such as banking, automobile, infrastructure, and real estate can directly benefit from this announcement. With the reduction in EMIs of repo-linked loans, the disposable income of the households will increase, which can benefit FMCG and automobile stocks. Also, a boost to the real estate and infrastructure sector will have a ripple effect on the related sectors such as cement, steel, and construction materials. Overall, the Indian equity market stands to benefit from the repo rate cut with a higher level of spending and investment

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