Gold financiers, including Manappuram Finance and Muthoot Finance, witnessed a sharp rise in share price levels after RBI governor Sanjay Malhotra announced a surprise 50 basis points rate cut in the recent MPC meet. While D-street players were anticipating a minor 25bps rate cut, the reduction was sharper than expected. At 02:50 pm, Manappuram Finance shares were trading at ₹246.72, up by 5.18% on the National Stock Exchange.
Muthoot Finance followed suit as the shares of the company rose over 6.42%, and was trading at ₹2,442 price level. More than rate cuts, RBI's revision of loan-to-value (LTV) ratio lifted the overall investor sentiment.
The central bank increased the loan-to-value ratio, for gold loans up to ₹2.5 lakh per borrower, from 75% to 85%. This means that for gold worth ₹1 lakh, borrowers can now receive up to ₹85,000, compared to the previous limit of ₹75,000.
Meanwhile, NBFC stocks followed suit and mirrored the sharp uptrend on the bourses.
Meanwhile, NBFC stocks followed suit and mirrored the sharp uptrend on the bourses. Shares of Bajaj Finance, Poonawalla Fincorp, Sundaram Finance Ltd experienced a sharp surge in share price levels. Bajaj Finance was trading around ₹9,366 price level, surging by nearly 5%.
Besides, NBFCs and gold financiers, broader markets also witnessed a sharp uptrend after weeks of range-bound movement. Benchmark indices, Sensex and Nifty, rallied post RBI governor's rate cut announcement.
"The Indian stock market responded optimistically to RBI’s surprise and aggressive growth push policy. The tremendous rate cut and liquidity boost via the CRR cut is expected to facilitate swift transmission of lower rates, reinforcing RBI's strong commitment to fostering economic growth, boosting investment, and stimulating consumption," said Vinod Nair, head of research, Geojit Investments.
The RBI's neutral stance moderated expectations for future rate cuts and concerns linger over current tepid demand, as reflected in the unchanged GDP growth forecast for FY26, Nair said. "However, the immediate liquidity expansion and growth-focused policy measures are likely to support the investor confidence amidst the ongoing global uncertainties."
