The Reserve Bank of India (RBI) surprised the market by reducing the repo rate by 50 basis points and the CRR (Cash Reserve Ratio) by 100 bps in its latest Monetary Policy Committee (MPC) meeting. This led to strong buying in auto stocks, which are highly sensitive to interest rate movements. Lower borrowing costs are expected to boost demand for vehicles across categories—passenger cars, two-wheelers, and commercial vehicles.
The Nifty Auto Index opened sharply higher at 23,343.05, rising nearly 1.6% compared to the previous close. This early jump reflected optimism even before the RBI announcement. Once the repo rate was cut from 6.5% to 6.0% and CRR lowered to 5.5%, the sentiment turned even more bullish.
Several auto stocks saw impressive gains:
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The RBI’s unexpected move to cut rates provided a major boost to auto stocks, which are among the most interest rate-sensitive sectors. With banks likely to pass on lower rates to customers soon, the demand for vehicles could rise in the coming quarters. The market has responded positively, signalling a potential revival in the auto industry’s growth trajectory.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jun 6, 2025, 11:59 AM IST
Kusum Kumari
Kusum Kumari is a Content Writer with 4 years of experience in simplifying financial market concepts. Currently crafting insightful content at Angel One, She specialise in breaking down complex topics into easy-to-understand pieces, blending expertise in market fundamentals and technical analysis.
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