Shares of rate-sensitive companies rose marginally after the Reserve Bank of India (RBI) kept the benchmark repo rate unchanged and lowered its inflation target at its second bi-monthly monetary policy review for FY 18 on Wednesday. Repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds. Sensex rose by 80.72 points and closed the session at 31,271.28, a gain of 0.26%. The BSE Bankex rose by 0.73% and hit a record high at 26,721.93. Barring one, all the constituents of the BSE Bankex posted gains. Among the public sector bank stocks, Punjab National Bank rose the most by 1.77%, followed by Bank of Baroda whose stock rose by 1.40%. Shares of private banks like ICICI Bank, IndusInd Bank, and Axis Bank rose anywhere between 0.5% to 2%, with Federal Bank registering the biggest gain. The BSE Realty index ended the session at 1954.11. Indiabulls Real Estate led the pack of real estate stocks with 4.11% gain.However, the largest real estate firm by market value — DLF — fell by 0.43% and ended the session at Rs 174.60 on BSE.
The auto index also rose by 0.70% and closed at 24,251.06. Nine out of the 13 constituents of the Auto Index ended the session higher. Bharat Forge was the biggest gainer, the stock rose by 3.78% and ended the session at `1210.30.
In a note to investors after the monetary policy, Nomura said it currently expects the RBI to leave rates unchanged through March 2018, which would then be followed by a cumulative 50bp of rate hikes starting April 2018.