Stocks of bank, real estate firms and automobile companies on Tuesday surged up to 7% as the new Monetary Policy Committee (MPC) led by RBI governor Urjit Patel marked its debut policy review with a surprise 0.25% rate cut.
Barring Axis Bank and IndusInd Bank, whose shares were down 0.75% and 0.65%, respectively, stock of all the banks ended the trading session in green. Leading the pack was State Bank of India (SBI), whose shares were up 1.59%, followed by Punjab National Bank (PNB) whose stock closed at `145.85, up 1.57%. Shares of other banks like Federal Bank, Yes Bank, ICICI Bank and Bank of Baroda were up between 0.62% and 1%.
The BSE Bank index was up 0.42% to close at 22,491.47 while the BSE Auto index ended the trading session at 22,786.81, up 0.05%. The Sensex was up 0.32% at 28,334.55 and Nifty50 closed at 8,769.15, up 0.36%.
Shares of other auto firms like Tata Motors, Bajaj Auto, Hero Moto and Eicher Motor were up between 0.20% and 1.60%. At the other end spectrum, shares of Mahindra and Mahindra (M&M), Ashok Leyland, Bharat Forge and MRF were down between 1% and 2%. Stock of Amara Raja Batteries was up around 3% at close at Rs 1,061.
Shares of realty firm NBCC rallied to a 52-week high of `283.50 to end the session at `276.85, up 7.33%. This was followed by Oberoi Realty whose stock was up around 4%. Shares of other companies like Unitech, Godrej Properties and Sobha were up around 1%. The BSE Realty index ended the session at 1,572.61, up 0.96%.
The rate cut was broadly in line with analysts’ expectations. Analysts at Edelweiss in a report dated September 29 said, “With monsoon approaching near-normal levels, agri-output is expected to touch record highs; cooling off inflationary pressures further and perhaps bolstering rural income/consumption. This in turn is expected to push domestic demand higher which in turn is expected to bolster economic activity.”
“While maintaining an accommodative stance, RBI has sounded cautious on upside risks to inflation. The room for further accommodation looks limited from hereon given the upside risks emanating from an increase in aggregate demand due to 7CPC, good monsoons, GST implementation and HRA increase from 7CPC,” said Upasna Bhardwaj, senior economist, Kotak Mahindra Bank.
Following the rate cut, the BSE benchmark Sensex closed up by 91 points at 28,334.55.