IDFC First Bank Share Price Jumps 7.35% as RBI Cuts Key Rates

IDFC First Bank share price saw a significant increase in trading today, jumping over 7% following a major announcement from the Reserve Bank of India (RBI). RBI Governor Sanjay Malhotra declared a cut in the repo rate by 50 basis points (bps) to 5.5%, a move widely anticipated by the market. In addition, the central bank also reduced the cash reserve ratio (CRR) by 100 basis points to 3% during its June policy meeting. These decisions are expected to inject considerable liquidity into the Indian banking system.

At 12:50 PM, IDFC First Bank share price was trading at ₹71.71.

Banking Sector Reacts Positively

The broader banking sector reacted enthusiastically to the RBI's accommodative stance. The NSE Nifty Bank index surged by 0.80%, hitting a record high of 56,205 around 11:00 a.m. on Friday. Leading the rally were shares of prominent lenders like HDFC Bank Ltd. and Axis Bank Ltd., reflecting widespread positive sentiment across the financial industry.

IDFC First Bank Share Price Performance

IDFC First Bank's stock was a significant beneficiary of the rate cuts. Its share price rose by as much as 7.35% to reach Rs 71.71 apiece, marking its highest level since October 22, 2024. This strong performance stood out, especially when compared to a more modest 0.92% advance in the broader NSE Nifty 50 index.

The increased investor interest in IDFC First Bank was also evident in its trading volume. On a year-to-date basis, the stock has shown positive returns of 11.09%, although it has seen a decline of 9.19% over the past 12 months. The Relative Strength Index (RSI) for the stock stood at 43.05, suggesting it is neither overbought nor oversold.

Impact of RBI's Decisions on IDFC First Bank Share Price

The RBI's decision to cut both the repo rate and CRR is a significant policy move aimed at stimulating economic growth. A lower repo rate typically leads to reduced lending rates for banks, making loans cheaper for businesses and consumers, which can boost investment and consumption.

The CRR cut, by reducing the amount of deposits banks must hold with the RBI, frees up more funds for lending, further enhancing liquidity in the system. These measures are expected to support credit growth and provide a tailwind for banks like IDFC First Bank.

Read more: Auto Stocks Surge After RBI’s Big Rate Cut: Ashok Leyland, Hero MotoCorp Among Top Gainers

Conclusion

IDFC First Bank's strong stock performance today highlights the immediate positive impact of the RBI's decision to cut key interest rates. The central bank's moves to reduce borrowing costs and boost liquidity are being welcomed by the banking sector, leading to a broad-based rally. As the Indian economy looks to gain momentum, banks with strong fundamentals and growth prospects like IDFC First Bank stand to benefit from the more favourable monetary policy environment. 
 
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