Dalal Street’s on fire! On June 6, 2025, the BSE Sensex skyrocketed 1,160 points from its day’s low to hit 82,300, while the Nifty50 smashed past 25,000, fueled by the Reserve Bank of India’s (RBI) blockbuster Monetary Policy Committee (MPC) decisions. The RBI slashed the repo rate by a hefty 50 basis points (bps) to 5.5% and cut the Cash Reserve Ratio (CRR) by 100 bps to 3%, injecting ₹2.5 lakh crore into the banking system. These moves, among five key decisions, sparked a market rally, with realty, banking, and auto stocks leading the charge. With inflation at 4.2% and growth slowing to 6.2% in Q4 FY25, the RBI’s bold play has experts buzzing. But can this momentum last?
Source: Business Today, June 6, 2025; The Economic Times, June 6, 2025
What Went Down on June 6, 2025?
The Indian stock market staged a jaw-dropping comeback on June 6, 2025, after the RBI’s MPC, led by Governor Sanjay Malhotra, unleashed a pro-growth policy bonanza. The Sensex, which dipped to 81,140 intraday, roared back to close near 82,300, up 1.2%. The Nifty50 climbed 250 points to reclaim 25,000, a psychological milestone. The rally wasn’t just headline indices—broader markets joined the party, with BSE Midcap and Smallcap indices up 0.5% each, and the India VIX fear gauge dropping 8%, signaling calm.
The trigger? A surprise 50 bps repo rate cut to 5.5%, bigger than the 25 bps markets expected, and a 100 bps CRR slash to 3%, freeing ₹2.5 lakh crore for lending. The MPC also shifted its stance to “neutral” from “withdrawal of accommodation,” hinting at more cuts if inflation stays low. X posts like @NileshShah68 called it a “jumbo” move, while @indiacharts hailed it as RBI’s “most aggressive” policy in years. With home loans potentially dipping below 7.75%, this could reshape India’s economy. Let’s unpack the MPC’s five key decisions and their impact.
Source: Moneycontrol, June 6, 2025; LiveMint, June 6, 2025
The RBI’s Five Game-Changing MPC Decisions
The MPC’s June 6 meeting delivered a masterclass in monetary policy. Here are the five key moves that sent markets soaring:
- 50 bps Repo Rate Cut to 5.5%:
- The repo rate, at which banks borrow from RBI, was slashed from 6% to 5.5%, a unanimous decision exceeding Reuters’ 25 bps forecast. This follows 25 bps cuts in February and April 2025, bringing cumulative cuts to 100 bps in 2025.
- Impact: Lower borrowing costs for banks, potentially dropping home loan rates to 7.5-7.75% and boosting credit growth to 14-15% in FY26, per @ANI.
- Source: Business Today, June 6, 2025
- 100 bps CRR Cut to 3%:
- The CRR, the cash banks park with RBI, was cut from 4% to 3%, injecting ₹2.5 lakh crore into the system. This reverses the 4.5% CRR hike from 2022.
- Impact: Frees 25% of locked funds, enabling banks to lend more, especially to MSMEs and consumers. @Vishwanath4389 called it a “liquidity tsunami.”
- Source: The Economic Times, June 6, 2025
- Shift to Neutral Stance:
- The MPC moved from “withdrawal of accommodation” to “neutral,” signaling flexibility for further cuts if inflation (4.2%) stays below 4.5%.
- Impact: Markets see this as a green light for 25-50 bps more cuts by December 2025, per @FinancialXpress.
- Source: LiveMint, June 6, 2025
- Lower FY26 Inflation Forecast:
- RBI revised its FY26 inflation projection to 3.7% from 4%, reflecting confidence in anchored inflation (May 2025: 4.2%, core: 3.8%).
- Impact: Signals room for growth-focused policies, boosting consumer and investor sentiment, per @Yuvraj_77.
- Source: Moneycontrol, June 6, 2025
- Liquidity Management Tweaks:
- RBI introduced measures to align money market rates with the repo rate, enhancing policy transmission. This includes fine-tuning variable rate reverse repo auctions.
- Impact: Ensures banks pass rate cuts to borrowers faster, benefiting sectors like realty and auto, per @dmuthuk.
- Source: Business Today, June 6, 2025