RBI Policy Impact: Real Estate, Banking stocks gain after 25 bps rate cut

Shares of rate-sensitive sectors traded higher on Friday, December 5, after the Reserve Bank of India’s Monetary Policy Committee cut the repo rate by 25 basis points to 5.25%.

Auto stocks rose up to 1%, while real estate as well as banking and financial names gained up to 2%. In the auto pack, Maruti Suzuki, Eicher Motors and M&M were among the top gainers.

Banking and financial stocks such as Indian Bank, PNB and SBI also advanced, and realty counters including Prestige, DLF and Oberoi Realty traded firm.

Anuj Puri, Chairman of ANAROCK Group, said the RBI's 25 bps repo rate cut is a clear positive for real estate as 2025 ends, especially for affordable and mid-income homebuyers who are most sensitive to borrowing costs.

With average housing prices across the top 7 cities rising about 10% this year, he said the cut offers much needed affordability support and could nudge buyers who had deferred decisions to return to the market, acting as a sentiment booster for year end sales.

He added that the real impact will depend on how quickly banks transmit the rate cut, and if they do, sales momentum is likely to strengthen into Q1 2026. While luxury housing will continue to lead the market next year, he said the cut can help bring more demand back into the affordable and mid-income segments where high prices have been a constraint.

The RBI had kept policy rates unchanged in its previous two meetings in August and October. Before that, the MPC had delivered a cumulative 100 basis point reduction across its February, April and June reviews.

The latest rate cut was a unanimous decision, with the policy stance retained as “neutral.”

The central bank said it will conduct Open Market Operations worth ₹1 lakh crore to address current liquidity conditions. OMOs involve the RBI buying or selling government securities in the open market to manage liquidity and regulate money supply.

“We have decided to conduct OMO purchases of ₹1 lakh crore this month,” the RBI Governor said. He added that the RBI will also undertake a 3 year dollar rupee buy sell swap during the month.

The Governor said these measures are aimed at ensuring durable liquidity in the system. He explained that the objective of OMO purchases and sales is to manage durable liquidity, while repo operations are used to handle short term, transient liquidity needs.

He said that while the RBI injects durable liquidity through OMOs, it simultaneously withdraws liquidity via VRRR operations to maintain balance in the system.