Rate-sensitive sectors fall even as RBI cuts rate, shifts stance; Realty and PSU indices tank 2.8%, Nifty Bank down 1%

Indian stock markets faced a sharp sell-off on April 9, despite a widely anticipated 25 basis point cut in the key policy rate by the Reserve Bank of India’s (RBI) Monetary Policy Committee. The central bank also changed its stance from ‘neutral’ to ‘accommodative’, signaling a tilt towards more growth-friendly policies. However, rate-sensitive sectors like banking, NBFCs, and realty underperformed, reflecting lingering investor concerns amid global economic uncertainties.

The Sensex declined 554 points to hit an intra-day low of 73,673.06, while the Nifty 50 fell 179 points to 22,356.60. Broader markets bore deeper losses, with the Nifty Midcap and Smallcap indices each slipping over 1.5 percent.

RBI Governor Sanjay Malhotra confirmed that all six members of the Monetary Policy Committee unanimously voted for the rate cut and the policy shift. This marks the second straight 25 bps cut this year, following a similar reduction in February that brought the repo rate down to 6.25 percent from 6.5 percent.

Malhotra explained that while the policy action supports economic growth, an accommodative stance gives the RBI the flexibility to ease further depending on inflation and growth dynamics. This is in contrast to a neutral stance, which keeps all options open, and a ‘withdrawal of accommodation’, which usually signals tighter policy.

According to Naveen Kulkarni, CIO at Axis Securities PMS, “The RBI’s decision was broadly in line with expectations. The stance change paves the way for further rate cuts. With inflation cooling, the regulator revised its FY26 CPI forecast down to 4 percent from 4.2 percent earlier, though GDP growth was slightly lowered to 6.5 percent from 6.7 percent.”

Rate Sensitives: Realty, Banks, and NBFCs Drag Down Market Sentiment

Rate-sensitive stocks took a heavy beating despite the dovish policy signal. Nifty Realty and Nifty PSU Bank emerged as the worst-hit sectors, each dropping 2.8 percent. Nifty Financial Services fell 1.5 percent, and Nifty Bank shed over 1 percent during the session.

All constituents in the Nifty Realty index ended in the red. Phoenix Mills and Anant Raj declined over 5 percent each, while Godrej Properties, Brigade Enterprises, and Sobha were down more than 2 percent.

Vimal Nadar, Head of Research at Colliers India, said, “Successive rate cuts will boost homebuyer confidence and improve housing demand, especially in affordable and mid-income segments. Developers will also benefit from lower financing costs. However, global risks remain a concern.”

In the Nifty Bank index, IDFC First Bank was the lone gainer. Stocks like Bank of Baroda, SBI, and Canara Bank lost over 2 percent each. In the financial services space, ICICI Prudential and ICICI General Insurance were the only two gainers. Muthoot Finance plunged 10 percent, while Cholamandalam Investment, LIC Housing Finance, Shriram Finance, REC, Jio Financial, and PFC declined more than 2 percent each.

Kulkarni noted, “We expect the rate cut’s full impact on banks’ margins to show up in Q1FY26, with partial effects in Q4. NBFCs such as Bajaj Finance, Shriram Finance, and SBI Cards stand to benefit from lower rates and the rollback of higher risk weights on bank loans to NBFCs. Among banks, large private players like HDFC Bank, ICICI Bank, and Kotak Bank are preferred.”

Auto Index Stays Flat, Mixed Performance Across Stocks

The Nifty Auto index remained flat with a mixed trend. TVS Motor, M&M, Hero MotoCorp, and Bajaj Auto posted gains of over 1 percent each. On the other hand, Bharat Forge, Balkrishna Industries, Motherson, Bosch, Tube Investments, and MRF lost between 1 and 3 percent.

Despite the RBI’s dovish policy shift and downward revision in inflation forecasts, equity markets failed to find support, with rate-sensitive sectors bearing the brunt of the sell-off. While the rate cuts are expected to have a positive impact in the medium term, immediate investor sentiment was weighed down by global uncertainties and domestic valuation concerns. Analysts believe that further easing, combined with improving macroeconomic indicators, could provide a better foundation for sectoral recovery in the coming quarters.

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