Auto stocks up; bank, realty flat

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New Delhi | Published: February 8, 2019 4:39:06 AM

Shishir Baijal, chairman and managing director at Knight Frank, sees the rate cut as a positive opportunity for the sector. “We hope it will provide a further fillip to the demand side for real estate. We now expect banks to pass on benefits of revised rates to end consumer of loans. ..” said Baijal.

RBI, Monetary Policy Committee, Shaktikanta Das, rbi policy rate, Inflation, oil prices, NBFCs, fund, mutual fund, investors

Shares of interest rate-sensitive stocks, including those of banking and real estate, ended nearly flat on Thursday, while stocks of the auto companies ended higher after the RBI cut the repo rate by 25 bps.

While the Nifty Bank index and Nifty PSU Bank ended 0.06% and 0.37 percent down, respectively, the Nifty Private Bank index ended marginally (0.07 percent) up. These indices closed the session at 27,387.15, 2,940.60 and 15,552.85 points, respectively. On the other hand, the Nifty Realty index ended flat, declining 0.07 percent at 224.95 points. In contrast, the Nifty Auto index gained 1.98 percent to close at 8,736.70 points.

According to analysts, the RBI’s rate cut move indicates there would be adequate opportunity to borrowers. “The rate cut will reduce cost of funds or bank borrowing rates, and hence we expect a reduction in EMIs on home loans, car loans and personal loans as the banks could cut the interest rates further,” said Gaurav Gupta, founder and CEO at IndiaLends.
The RBI’s decision is in line with our expectations, said Shailendra Kumar, CIO at Narnolia Financial Advisors.
Sujan Hajra, chief economist, Anand Rathi Financial Services, expects another 50 bps cut in 2019.

Shishir Baijal, chairman and managing director at Knight Frank, sees the rate cut as a positive opportunity for the sector. “We hope it will provide a further fillip to the demand side for real estate. We now expect banks to pass on benefits of revised rates to end consumer of loans. ..” said Baijal.

“This is a temporary phenomenon. Globally crude oil prices are rising gradually and it is a matter of concern for the markets. Trade tension and geopolitical matters also remain causes for worry. Hence, we expect the rupee to trade in 71-72 range in the near term with the currency continuing its depreciation bias,” shared Rushabh Maru, research analyst at Anand Rathi.

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