Infrastructure and capital goods sector stocks have rallied on the bourses after the Reserve Bank of India (RBI) on Tuesday cut the cash reserve ratio by 50 basis points and injected Rs 32,000 crore into the system to ease liquidity.

The CRR, the amount of deposits the banks are required to keep with RBI in cash, has been reduced to 5.5% from 6% with effect from January 28. The short-term lending rate (repo) has been kept unchanged at 8.5%.

With additional liquidity on account of the CRR cut, there is a possibility that banks may reduce interest rates to attract borrowers.

Commenting on RBI’s credit policy review, Mr. Pradeep Jain, Chairman, Parsvnath Developers Limited and Chairman, Confederation of Real Estate Developers’ Association of India (CREDAI) said, “After the negative impact created by thirteen continuous rate hikes, this will prove insufficient to boost the growth. For real estate sector in particular, this will serve as a signal that interest rates will now ease. Buyers may opt for floating rate loans at this juncture since the signal is clear".

Among the individual stocks, Larsen and Toubro, GMR Infrastructure, IRB Infrastructure, Sobha Developers and HDIL have rallied 6% each on the Bombay Stock Exchange.