RBI lifts repo rate to 5.5%, boosting banks while auto and realty slide

During its October 5-7 session, the RBI’s Monetary Policy Committee unanimously voted to raise the benchmark repo rate by 25 basis points, taking it to 5.5% and changing its policy outlook from neutral to calibrated tightening. Banking-related indices, including Nifty Bank, Nifty Private Bank, Nifty PSU Bank and Nifty Financial Services, climbed up to 1% as shares of Kotak Mahindra Bank, Union Bank of India and ICICI Bank gained as much as 2%.

The broader market slipped, with the Nifty 50 down 0.38%, while the auto and real-estate segments weakened, the former falling about 1% and the latter 0.24%, dragging down stocks such as Bajaj Auto and DLF. RBI Governor Sanjay Malhotra signaled that a rate cut is unlikely in the near term, leaving the next move open to either another hike or a pause. Market commentators said the hike was already priced in but underscored rising inflation, especially from oil, and warned that tighter financing could curb growth in capital-intensive sectors.