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Most industry leaders expect a 25 bps repo rate cut by the RBI MPC on June 6; MSMEs, banking, housing, and healthcare may benefit. Experts suggest key tips to investors.
Investors should rely on the larger names in these sectors, which still trade at decent valuations compared to smaller names.
As the Reserve Bank of India’s Monetary Policy Committee (MPC) draws to a close in Mumbai on Friday, anticipation is building across industries ahead of the policy outcome on June 6. A growing number of industry leaders are pinning hopes on a 25 basis point cut in the repo rate — from the current 6% to 5.75%. State Bank of India (SBI), however, says the RBI MPC may go for a “jumbo rate cut” of 50 bps to reinvigorate the credit cycle and counterbalance uncertainties.
Also Read: 25 bps Or 50 bps? RBI To Cut Repo Rate Again In This Week’s MPC Meeting, Say Experts
Most business leaders across sectors believe that current macroeconomic conditions — marked by controlled inflation and steady growth momentum — offer the central bank room to initiate a modest rate cut. Sectors like MSMEs, affordable housing, and healthcare are seen as major beneficiaries if borrowing costs ease further.
25-bps Rate Cut Likely
Suresh Darak, founder of Bondbazaar, said, “The RBI is expected to cut the repo rate by 25 basis points to 5.75% to support economic growth while keeping inflation in check. The central bank may also maintain its accommodative stance.” He noted that any downward revision in inflation forecasts could further open the door for additional rate cuts later in the year.
Darak added that a rate cut would be particularly positive for the bond market, as lower interest rates typically lead to higher bond prices, enhancing returns for investors in government and fixed-income securities.
Expecting a 25-bps cut, Madan Sabnavis, chief economist at Bank of Baroda, said, “We do believe that given the rather benign inflation conditions and the liquidity situation which has been made very comfortable through various measures of the RBI, the MPC would go in for a 25 bps cut in the repo rate on the (June) 6th.”
Consumer and Business Relief
Amit Suri, founder of AUM Wealth, echoed market expectations of a 25 bps cut. “This is a good time for borrowers to rethink their repayment strategies. Those with high-interest loans like personal loans or credit card debt should consider prepayment or consolidation. For floating-rate home loan borrowers, EMIs will gradually decline as rates fall, improving monthly cash flow,” he said.
The credit-starved MSME and NBFC sectors, especially in rural and semi-urban pockets, could see renewed lending momentum. Deepak Aggarwal, Co-founder and CFO of Moneyboxx Finance, believes a “calibrated rate cut” will help empower small enterprises and drive job creation and inclusive growth.
Real Estate and Healthcare in Focus
In the real estate sector, a potential rate cut could provide the boost needed to clear unsold inventories. Vimal Nadar, national director & head of research at Colliers India, said, “A third consecutive rate cut would uplift homebuyers’ sentiment, particularly in affordable and mid-income housing. Developers too will benefit from reduced borrowing costs.”
Healthcare finance players are also watching closely. Sahil Lakshmanan, chief business officer at CarePal Money, said lower interest rates would enable more accessible loans for medical expenses and promote financial inclusion in healthcare.
Balancing Growth and Inflation
The overall industry sentiment is tilted towards a pro-growth move by the central bank. With inflation within manageable limits and the economy showing resilience, a rate cut could signal RBI’s continued commitment to fuelling growth while remaining vigilant on inflation risks.
All eyes are now on RBI Governor Sanjay Malhotra and the MPC’s final decision tomorrow, Friday, June 6.
What Should Investors Do?
“From the RBI’s rate cuts, the sectors that should get support and do well include the first beneficiaries, which are NBFCs and then banking. Other sector which is likely to benefit includes consumption, with its various subsets including consumer durable and consumer discretionary. As the economy recovers, other sectors effectively linked to liquidity — parts of consumption in various forms like airlines, hotels, retail, e-commerce, autos, and even real estate — might also do well,” Vinayak Magotra, founding team of Centricity WealthTech Considering, said.
However, in view of high valuations, investors should rely on the larger names in these sectors, which still trade at decent valuations compared to smaller names, he added.
“Sector leaders like large private banks — ICICI and HDFC — along with high-quality NBFCs like Bajaj Finance, remain preferable. Among consumer durables, companies selling ACs like Voltas, along with discretionary players including strong names like M&M, InterGlobe Aviation, large hotels catering to the premium segment like Ventive Hospitality, and leading retail players in both gold and apparel, are worth considering,” Magotra said.
Dos & Don’ts For Investors: Among the DOs, investors should continue their systematic investments and slightly shift focus toward larger names considering the worsening geopolitical situation. The approach should not only be top-down but also bottom-up, with a focus on companies delivering strong results even in such conditions, Magotra said.
The Don’ts includes not avoiding frothy sectors with poor cash flows relative to reported earnings. Investing in lump sums during sharp market pullbacks should also be avoided, and in a situation like this where uncertainty prevails, asset allocation is the most important factor that must not be overlooked, he added.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso… Read More
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