RBI Monetary Policy Analysis – June 2025

 

Overview

On June 6, 2025, the Reserve Bank of India (RBI) introduced a notable monetary policy adjustment to promote economic expansion amid moderating inflation. This analysis explores the primary policy changes, identifies sectors likely to gain, and evaluates selected stocks for potential market movements.

Major Announcements

• Repo Rate Reduction: Lowered by 50 basis points to 5.5%, the third cut in 2025, totaling 100 basis points.

• CRR Cut: Reduced by 100 basis points to 3%, injecting ~₹2.5 lakh crore into the banking system.

• Policy Stance Shift: Moved from "Accommodative" to "Neutral," adopting a data-driven approach.

• Inflation Projection: FY26 CPI inflation forecast revised to 3.7% from 4%.

• GDP Outlook: FY26 real GDP growth estimate unchanged at 6.5%.

Sectors Likely to Benefit

Banking & Financial Sector

• Impact: CRR cut boosts liquidity, potentially driving loan growth.

• Considerations: Lower repo rates may reduce margins, but higher lending could offset this.

Real Estate Sector

• Positive Impact: Lower interest rates reduce home loan costs, boosting affordable and mid-segment housing demand.

• Considerations: Affordable housing developers likely to see greater benefits.

Automotive Industry

• Positive Impact: Reduced borrowing costs may increase vehicle financing and sales, especially for two-wheelers and passenger vehicles.

• Considerations: Companies with rural and semi-urban presence may gain more.

Stock Analysis

HDFC Bank Ltd. (NSE: HDFCBANK)

• Sector: Banking

• Fundamentals: P/E ~20.35, EPS ₹73.44

• Technicals: Bullish, trading above 50-day and 200-day moving averages.

• Outlook: Well-positioned for liquidity-driven credit growth.

ICICI Bank Ltd. (NSE: ICICIBANK)

• Sector: Banking

• Fundamentals: P/E ~20.3, EPS ₹54.42

• Technicals: RSI ~61.56, strong bullish trend with rising volumes.

• Outlook: Poised to benefit from enhanced liquidity and lending.

Infosys Ltd. (NSE: INFY)

• Sector: Information Technology

• Fundamentals: P/E ~22.6, EPS not available

• Technicals: RSI ~47.35, stable with growth potential.

• Outlook: May gain from global IT spending and digital projects.

Tata Consultancy Services Ltd. (NSE: TCS)

• Sector: Information Technology

• Fundamentals: P/E ~26.1, EPS not available

• Technicals: Strong upward trend.

• Outlook: Well-placed for global IT demand.

Reliance Industries Ltd. (NSE: RELIANCE)

• Sector: Conglomerate (Energy, Retail, Telecom)

• Fundamentals: P/E ~24.7, EPS not available

• Technicals: Sustained uptrend with solid support.

• Outlook: Benefits from increased consumer spending and economic activity.

Market Outlook

The RBI’s proactive measures reflect a commitment to economic growth. Banking, real estate, and automotive sectors are set to gain momentum. Investors should monitor macroeconomic indicators and corporate earnings to navigate market trends effectively.