Bank Nifty Hits All-Time High On Optimism Over RBI's Jumbo Rate Cut

New Delhi: The Nifty Bank index hit its all-time high on Friday, rising 1.47 per cent, after the Reserve Bank decided to cut cash reserve ratio (CRR) by a huge 1 per cent, which will unlock Rs 2.5 lakh crore liquidity to the banking system for lending to productive sectors of the economy. With the reduction in four equal tranches ending November 29, 2025, the CRR would come down to 3 per cent. This means that the commercial banks would have to maintain a lower level of 3 per cent in liquid cash form with the RBI, allowing them to have higher funds for lending.

The Nifty Bank index jumped 817.55 points, or 1.47 per cent, to settle at 56,578.40. Intra-day, it surged 934.15 points, or 1.67 per cent, to reach an all-time peak of 56,695. "Nifty reclaimed the 25,000-mark, rising 252 points after the RBI MPC delivered surprise double liquidity booster for the markets. The RBI front-loaded the monetary easing cycle as it announced a massive 50 bps cut in the repo rate (versus expected 25 bps), while changing the stance to 'neutral' from 'accommodative' given global growth challenges.

"Additionally, it announced a 100-bps cut in the CRR, spread across four tranches, to infuse liquidity in the system. The announcement triggered a sharp rally in banking and financial stocks with Nifty Bank and Nifty Financial Services indices hitting all-time high levels," Siddhartha Khemka, Head -- Research, Wealth Management, Motilal Oswal Financial Services Ltd -- said. The 50-share NSE Nifty reclaimed the 25,000-level and climbed 252.15 points, or 1.02 per cent, to settle at 25,003.05.

"Bank Nifty hit a record high, buoyed by the Reserve Bank of India's steeper-than-expected rate cut and reduction in the cash reserve ratio requirement as investors anticipated stronger credit growth and improved profitability for banks," Satish Chandra Aluri, Analyst, Lemonn Markets Desk, said.