SBI Cards & Payment Services Ltd: Market Reaction to RBI’s Monetary Policy

On June 6, 2025, the Reserve Bank of India (RBI) delivered a significant monetary policy update that has had a notable impact on the financial markets, including companies like SBI Cards & Payment Services Ltd. The RBI’s Monetary Policy Committee (MPC) announced a front-loaded 50 basis points (bps) cut in the repo rate, reducing it to 5.5%, and a 100 bps reduction in the cash reserve ratio (CRR) staggered over four tranches. This move was aimed at supporting economic growth and came as a surprise to many, with the policy stance shifting from ‘accommodative’ to ’neutral’.

Market Impact and Stock Performance

The unexpected rate cut and CRR reduction have been well-received by the market, particularly benefiting rate-sensitive stocks. SBI Cards & Payment Services Ltd saw its shares rally by 5% on June 6, 2025, as reported by Business Standard. This surge in share price was part of a broader trend where several financial stocks, including HDFC Bank and HDFC Asset Management Company, hit record highs. The positive market sentiment was driven by the anticipation of lower borrowing costs and improved liquidity conditions, which are favorable for credit card issuers like SBI Cards.

RBI’s Policy and Bond Markets

The RBI’s policy decision has also reset expectations for India’s bond markets. The synchronized signal on rate direction and system liquidity is expected to lead to deeper yield compression, as noted by Business Standard. This environment of lower interest rates is likely to benefit companies with high leverage, including those in the financial sector, by reducing their cost of capital.

Sectoral Performance

While the financial sector, including SBI Cards, experienced gains, the broader market showed mixed trends. On June 5, 2025, the Nifty traded range-bound but closed marginally higher, with sectors like metals and energy performing well, while realty and financials faced some pressure. However, the positive impact of the RBI’s policy on financial stocks helped offset some of the sectoral weaknesses.

Conclusion

The RBI’s monetary policy update has had a significant positive impact on SBI Cards & Payment Services Ltd, with its shares rallying in response to the rate cuts and CRR reduction. The broader financial sector also benefited, with several stocks hitting record highs. As the market adjusts to the new policy stance, the focus will be on how these changes influence economic growth and corporate earnings in the coming months.