The Reserve Bank of India’s decision to reduce the repo rate by 25 basis points comes at a crucial time and is expected to have a positive cascading effect across all capital-intensive sectors in the country, said Ratul Puri Chairman, Hindustan Power

“For the power industry, access to lower-cost financing is essential to accelerate infrastructure development, invest in clean energy projects, and modernize grid systems. The reduction in borrowing costs will ease the financial burden on existing projects and enhance the viability of new investments, especially in the renewable energy space where long-term funding plays a critical role,” Puri said.

This step will help in improving investor confidence and support the sector’s broader mission of providing reliable, sustainable, and affordable energy to the nation Puri added.

Shares of Cholamandalam Financial Holdings Ltd., IIFL Finance Ltd., Muthoot Finance Ltd., Cholamandalam Investment and Finance Co. and Manappuram Finance Ltd. declined after the Reserve Bank of India announced it will issue comprehensive regulations on prudential norms for gold loans.

The RBI has revised the growth outlook and this according to Shishir Baijal, Chairman and Managing Director, Knight Frank India reflects caution over global trade tensions. However he said that there is optimism for domestic recovery.

“A drop in crude prices and a stronger rupee have eased inflation, leading to a revised target of 4%. With a cumulative 50 basis point cut in 2025, it is now vital for commercial banks to transmit the benefit to consumers. Lower borrowing costs can aid housing affordability, developer funding, and infrastructure growth,” said Baijal.Nifty Bank was trading lower by 0.54% on Wednesday, even as the Reserve Bank of India cut the repo rate and changed its stance following its Monetary Policy Committee meet. The fall reflects a broader market trend as the Nifty 50 declined over 0.70%, after US tariffs came into effect.

After RBI cut rates on Wednesday Jayesh Mehta of DSP Finance said that investors are still looking at three rate cuts with no change in rate cut outlook. He further said that the environment will remain volatile till clarity emerges on the tariff situation.

According to Mehta bond yields will come off sharply if there is no reversal in the tariff situation.