1. RBI’s credit policy review: Urjit Patel may hold rates, most rate-sensitive stocks under pressure

RBI’s credit policy review: Urjit Patel may hold rates, most rate-sensitive stocks under pressure

A Reuters poll also showed 26 of 44 analysts surveyed expect the committee to hold rates, while 16 see prospects for a 25 basis points cut.

By: | Updated: October 4, 2016 1:01 PM
BSE Sensex, NSE Nifty Rate-sensitive stocks were mostly trading lower in afternoon trade on Tuesday ahead of the RBI’s monetary policy announcement later in the day

Rate-sensitive stocks were mostly trading lower in afternoon trade on Tuesday ahead of the RBI’s monetary policy announcement later in the day, which marks Governor Urjit Patel’s maiden review. At 12.38 pm, the BSE Bankex, BSE Auto and BSE Realty index were down by 0.20 per cent, 0.14 per cent and 0.02 per cent, respectively.

In the banking space, Bank of Baroda, IndusInd Bank, Axis Bank, Punjab National Bank, Federal Bank and HDFC Bank were down by 1.63 per cent, 1.03 per cent, 0.83 per cent, 0.70 per cent, 0.67 per cent and 0.15 per cent. On the other hand, YES Bank, Kotak Mahindra Bank, State Bank of India and ICICI Bank were up between 0.09 per cent and 0.60 per cent.

According to IFA Global, most market participants expect the RBI to hold rates as of now and consider reduction at its December meeting.

Ajay Bodke, chief executive officer and chief portfolio manager: PMS, Prabhudas Lilladher said, “In our view RBI would refrain from cutting rates in its meeting on Tuesday though the consumer inflation has been trending down for the last few months and is well within RBI’s comfort zone of 4% +/-2%. Ample rains after two years of drought resulting in expected bountiful kharif harvest post October-November 2016 as well as a rise in water table & strong reservoir levels across India presaging a strong rabi season would lead to further softening in CPI & food inflation allowing more leeway to the Central bank in its policy of monetary accommodation.”

Real estate majors such as Indiabulls Real Estate, Phoenix Mills and DLF were down by 1.97 per cent, 0.67 per cent and 0.56 per cent, respectively, around (12.41 pm).

Auto stocks such as Ashok Leyland, Bharat Forge, MRF, Mahindra & Mahindra and Motherson Sumi were down up to 2.35 per cent. On the other hand, Hero MotoCorp, Tata Motors and Maruti Suzuki were up up to 0.47 per cent.

A Reuters poll also showed 26 of 44 analysts surveyed expect the committee to hold rates, while 16 see prospects for a 25 basis-points cut.

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