The Rate Cut Context
RBI delivered a 25bps cut in February 2026 and another 25bps in April 2026, bringing the repo rate to 5.75%. This is the first sustained easing cycle since 2020 and signals a structural shift in monetary policy after two years of tight conditions.
Sectors That Benefit
NBFCs and housing finance companies benefit directly — their cost of funds falls while loan book yields remain sticky, expanding net interest margins. Real estate benefits from lower EMIs stimulating demand. Utilities and infrastructure become relatively more attractive as their debt costs fall and bond yields decline. Rate-sensitive IT services see improved client capex budgets.
Sectors to Watch Carefully
Banks benefit, but the impact is more nuanced — deposit repricing takes 3–6 months to flow through, so near-term NIM compression is possible. Small-cap companies with high debt loads see the most dramatic benefit but also carry higher execution risk.