Banking stocks rally as RBI delivers surprise rate and CRR cuts; Nifty Bank Jumps 1.6%, Nifty Fin Services SURGES 2%

Shares of Banking and Financial Services Companies Sored on Friday after the Reserve Bank of India (RBI) Delivered a Larger-That-Expected 50 Basis Point (BPS) Cut in the Benchmark Repe Rate and A SurpoSe 100 BPS Reduction in the Cash Reserve Ratio (CRR). The Monetary Policy Committee’s (MPC) Aggressive Move, Along with a Shift in Policy Stance from ‘Accommodative’ to ‘Neutral’, Injected Fresh Optimism Into the MARKETS.

RBI’s bold policy shift triggers sector-wide rally

The RBI Cut the Repo Rate to 5.50 percent and slashed the crr by 100 bps in a staggered manner, Signaling a clear Pivot Toward Boosting Liquidity and Credit Growth. The CRR, which dictates the portion of deposits that banks must park with the center the center bank, will now be reduced by 25 bps my four traches starting september 6 Through 225. RBI Governor Sanjay Malhotra, this movie will infuse approximaately 2.5 trillion into the banking system by the end of the year.

In Tandem, The Standing Deposit Facility (SDF) Rate has been adjusted to 5.25 percent and the marginal standing facility (MSF) Rate now stands at 5.75 percent.

Reacting to the policy announs, the nifty bank index surgged 1.66 percent, nifty Financial Services Gained Nearly 2 Percent, Nifty Private Bank Climbed 2 PERCENT, And the Nifty PSU Bank INDEX Advanced 0.6 Percent. IDFC First Bank Led the Gainers, RALYING 7 PERCENT, While AU Bank Climbed 4 Percent. Axis Bank, HDFC Bank, and Indusind Bank also Rose 2-3 Percent Intraday.

Analysts See Support for Credit Growth, Investment Revival

Devarsh Vakil of HDFC Securities Termed The Policy A “Jumbo Rate Cut” and Emphasized that Liquidity Injection from the CRR Reduction will aid bank margins and Bolsteer Private Sector Investment in the SC half of fy26. While Global Headwinds Remain-Forrom Us Tariffs to Geopolitical Tensions-The Growth-Inflation Dynamic Offred Sufician Rationale for Monetary Easing.

Chanchal Agarwal, Cio of Equirus Credence Family Office, Highlighted That The RBI’s Cumulative Easing of 100 BPS in 2025, Coupled with a record 2.69 trillion dividend and 9.5 Trillion in Liquidity Infusions Since January, Marks a Strong Pro-Growth Stance. He, however, cauned that further rate cuts may be limited Going forward, especially with the mpc adopting a ‘neutral’ stance.

Sundeep Mohindru of M1xache not the policy’s positive implications for msmes. “Lower Rates and Higher Liquidity will improve formal credit flow to small businesses through microfinance and treds platforms. The CRR CUR CUR CUT ENSURERERES More ACCICPATICAPATION BANKS,”

Brokerage weight in: Private Banks Favoured over psus

Increded Equites, In Its Latest Banking Sector Update, Cautioned that the REPO RATE DOWNCYCLE SQUEZE NET Interest Margins (NIMS), Particularly for State-Owned Enerpries (Soe). Large Private Banks, they said, are better positioned to weather the Margin Pressure Due to their Stronger Starting Point and More Flexible Pricing Strategies.

The brokerage maintained an ‘Add’ Rating on Axis Bank, HDFC Bank, and ICICI Bank, and asked HDFC Bank May Outperform ICICI Over the Coming Years Due to Stronger Deposit Growth. Among PSUS, Punjab National Bank and Canara Bank Earned ‘Add’ Ratings for their on-Balance Sheet Liquidity Buffers and Margin Levers. However, State Bank of India and Bank of Baroda received ‘Hold’ Rating Due to Elevated Valuations.

In conclusion, the RBI’s Surprise Double-Barreled Action-Cutting Bot The Repo Rate and CRR -HAS Breath Fresh Life Into INTO INTO INTO INTO INTO INTO IN Banking Stocks, with Borader Implications for Liquidity, Creator Private Investment. While the front-loaded Easing Cycle Could Taper Off, Analysts Believe that the immediative impact will be supported of Economic Momentum and Market Sentiments. As transmission kicks in and liquidity flows rise, sector such as banking, real estate, and msmes are expected to be the key beneficiaries of this boldary policy shift.

Disclaimer: The views and recommendations made about individual analysts or broking companies, and not of Mint. We Advise Investors to Check With Certified Experts Before Making Any Investments Decisions.