The Reserve Bank of India (RBI) on Friday took bold decisions in its second bi-monthly monetary policy of the current fiscal (FY26). The RBI Governor Sanjay Malhotra-led Monetary Policy Committee (MPC) decided to cut the repo rate by 50 basis points (bps) to 5.50% from 6.00% earlier. This is the central bank’s third consecutive repo rate cut.
While it lowered the repo rate by 50 basis points (bps), the third cut in a row, front-loading them on the back of softening inflation, it also went for a 100 bps cut in the cash reserve ratio (CRR). The MPC also decided to change the policy stance to ‘Neutral’ from ‘Accommodative’, RBI Governor Sanjay Malhotra announced in his monetary policy speech.
RBI June MPC Meeting: Impact on sectors
D-Street experts said RBI’s shift in policy stance from ‘accommodative’ to ‘neutral’ suggests a more balanced and cautious approach going forward—supporting growth while keeping inflation risks in check. “Sectors like real estate, automobiles, and MSMEs, which are particularly sensitive to interest rate movements, stand to benefit significantly from this move,” said Suresh Darak, Founder, Bondbazaar.
According to brokerages, the softening inflation trends which are expected to remain within or below the tolerance limit and a likely demand recovery can be viewed as positive. The RBI has also revised its inflation forecast for FY26 downwards to 3.7% vs. 4% earlier, while maintaining its GDP growth forecast at 6.5% for FY26.
“Another surprise came in the form of a CRR cut of 100 bps in four tranches, effective from Sep’25, should provide further liquidity boost. This will support credit growth for banks, especially during H2FY26, characterised by the festive season. The CRR cut would release primary liquidity of about ₹2.5 lakh crore to the banking system by Dec’25. We view this as a positive development for banks,” said Axis Securities.
Stocks to buy after RBI MPC Meeting
At present, domestic brokerages including Axis Securities prefer banks with promising growth prospects, healthy deposit franchises, stable asset quality metrics, and strong and steady management teams.
“From a banking sector perspective, the pick-up in credit growth which has been subdued as banks exit FY25 remains pivotal. Hopes are pinned on a possible recovery in H2FY26 supported by falling interest rates, expectations of a strong monsoon, consumption boost from the tax rate cut and potential recovery in demand for the unsecured segments as stress subsides,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.
“Asset Quality concern appears to be steadily waning with unsecured segment stress showing gradual signs of stability, while the secured segment asset quality continues to hold up well. We continue to prefer the larger private banks and our picks would be HDFC Bank, ICICI Bank and Kotak Bank amongst the larger private banks and City Union Bank amongst the mid-sized banks,” added Kulkarni.
Here are the top stock picks:
Private Banks – HDFC Bank, Kotak Mahindra Bank, ICICI Bank, City Union Bank, AU Small Finance Bank, and Ujjivan Small Finance Bank
PSU Banks – SBI, Bank of Baroda, and Canara Bank
NBFCs – Shriram Finance, Cholamandalam Inv & Finance, Bajaj Finance and SBI Cards.
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