The Reserve Bank of India’s (RBI) bold move has set Indian stock markets ablaze, pushing the Nifty Bank index beyond the coveted 57,000 mark for the first time. This milestone didn’t merely signify a new record but underscored investor confidence boosted by the central bank’s decisive action.
Driven by the RBI’s unexpected yet substantial 50-basis point cut in the repo rate, financial stocks led a spirited rally that saw robust gains across the sector. Banking giants, particularly mid-sized players like IDFC First Bank and Kotak Mahindra, emerged as front-runners, riding high on improved liquidity forecasts and potential margin expansion.
Indian stock markets maintained their upward trajectory on June 9, propelled mainly by robust gains in financial stocks following the Reserve Bank of India’s (RBI) unexpected rate reductions. This buoyant mood saw the Nifty Bank index cross the notable 57,000 benchmark, significantly boosted by IDFC First Bank and Kotak Mahindra Bank. Analysts remain particularly optimistic about the enhanced prospects for mid-sized banks, driven by increased liquidity.
The financial sector was conspicuously exhilarated by the RBI’s bold monetary easing, involving a deeper-than-anticipated 50-basis-point reduction in the repo rate, coupled with a surprising 100-basis-point cut in the Cash Reserve Ratio (CRR). These policy decisions have spurred expectations of improved credit flow within the economy and a strong recovery in bank earnings.
Reflecting investor enthusiasm, all twelve stocks in the Nifty Bank index started positively, with IDFC First Bank, Kotak Mahindra Bank, and Axis Bank advancing up to 3 per cent. This surge lifted the index to a fresh high of 57,049, marking a 1 per cent increase and building upon the previous session’s solid gain of 1.50 per cent.
The RBI has actively implemented measures to enhance liquidity, injecting more than Rs. 70 billion through open market operations (OMOs) over the past five months. This continuous infusion, initiated in mid-January, alleviated earlier liquidity constraints, allowing the banking system to return to surplus conditions from April onwards. However, bank credit growth slowed to 12 per cent year-on-year by March 2025, a sharp deceleration from 16.3 per cent recorded a year earlier.
Following the RBI’s decisive actions, international brokerages have become increasingly optimistic about Indian banking, particularly targeting mid-sized private banks and select Non-Banking Financial Companies (NBFCs). Nomura and UBS identified AU Small Finance Bank, IndusInd Bank, and IDFC First Bank as prime beneficiaries of improved liquidity. At the same time, larger institutions like HDFC Bank and Axis Bank could also benefit, particularly those facing deposit challenges.
Jefferies noted potential upside in net interest margins (NIMs) for fixed-rate lenders, including Mahindra Finance, Chola Finance, and SBI Cards, highlighting Bajaj Finance, Chola, and Shriram Housing Finance as attractive picks. IIFL and Goldman Sachs emphasized the positive implications of CRR cuts on net interest margins (NIMs), return on assets (ROA), and earnings, projecting liquidity infusions of Rs. 2.5 trillion. Despite concerns over economic growth reflected in frontloaded rate cuts, analysts anticipate steady earnings growth in mid-tier banks through FY26.
“Early monetary easing reflects unease about GDP growth. While banks flush with liquidity might boost lending, we anticipate moderate loan growth, around 11-11.5 per cent in FY26, given corporate preference for capital markets over bank borrowing and a predicted slowdown in home loans,” stated IIFL.
Shares of Capri Global Capital Ltd rose nearly 12 per cent on June 9 after unveiling its innovative Auto Pay feature for gold loans, enhancing customer convenience and furthering its digital transformation goals. The feature automates loan repayments directly from customer accounts, aiming to eliminate missed payments and foster financial discipline.
Ravish Gupta, Business Head of Gold Loans at Capri Loans, highlighted customer-centric innovation, emphasizing the seamless, digital-first experience designed to simplify financial management for customers. This follows the recent introduction of an AI-powered WhatsApp chatbot, reinforcing Capri’s commitment to comprehensive digital customer service.
Capri’s stock surged 12.9 per cent intra-day to Rs. 171.50 following the announcement, despite remaining 28 per cent below its 52-week peak of Rs. 236 from June 2024. Recent digital initiatives have positively impacted market sentiment, with shares gaining nearly 13 per cent this month alone. Capri reported strong fourth-quarter earnings, with consolidated profit after tax (PAT) surging 115.3 per cent to Rs. 177.7 crore, supported by a 48.52 per cent increase in operational revenue to Rs. 739.2 crore.
“Early monetary easing reflects unease about GDP growth. While banks flush with liquidity might boost lending, we anticipate moderate loan growth given corporate preference for capital markets over bank borrowing and a predicted slowdown in home loans”
Time Technoplast, a small-cap entity, surged over 40 per cent in the past month, buoyed by Motilal Oswal Financial Services’ bullish outlook, which sees significant future growth potential driven by operational enhancements and attractive valuations. The brokerage initiated a buy rating, projecting substantial upside potential in the coming years.
Bajaj Finance saw shares rise nearly 3.68 per cent after setting June 16 as the record date for its planned 1:2 stock split and 4:1 bonus issue, following substantial quarterly profits, reflecting sustained credit demand.
Indian Energy Exchange (IEX) gained over 4 per cent, driven by robust growth in electricity trading volumes. In comparison, Suzlon Energy shares rose around 2 per cent amid significant promoter share sales valued at Rs. 1,309 crore. MCX achieved record highs, surging over 5% following regulatory approval to launch pioneering electricity derivatives, marking a notable advancement in India’s energy trading landscape.
Analysts attribute this exuberance to expectations that lower borrowing costs will reinvigorate lending growth, improving profitability across the banking landscape. Investors seemed particularly enthused by RBI’s commitment to a sustained economic revival, betting on enhanced credit demand amid declining interest rates.
The Nifty Bank’s new lifetime high is not just symbolic—it signals strength in the broader financial ecosystem. Banks are poised to benefit significantly as a more conducive lending environment bolsters their loan books, enhancing earnings visibility in the quarters ahead.
Moreover, market watchers anticipate continued positive momentum driven by improved investor sentiment and the Reserve Bank of India’s (RBI) proactive stance. While larger banks are expected to solidify their market positions, analysts predict mid-cap banks might outperform, capitalizing on favourable market dynamics.
On the other hand, gold prices faced downward pressure on June 9, dropping Rs. 521 to Rs. 96,515 per 10 grams on the Multi Commodity Exchange (MCX), amid subdued demand despite modest international price stability.
Silver prices saw an upward movement on Monday, climbing Rs. 65 to reach Rs. 1,05,524 per kilogram in futures trading, as traders actively expanded their positions. On the MCX, silver contracts scheduled for July delivery experienced a marginal increase of Rs. 65, or 0.06 per cent, reaching Rs. 1,05,524 per kg amidst active participation reflected by a business turnover of 21,115 lots. Analysts attributed the price rise to increased buying of fresh stocks by market participants, indicating a strengthened market sentiment.
Meanwhile, this bullish sentiment also rippled through the broader equity markets, reflecting optimism that economic recovery efforts are firmly on track. As banks stand to benefit from increased economic activity and lower capital costs, investors remain optimistic about sustained market growth, laying the groundwork for further record-setting performances in the weeks to come.
