Interest rate sensitive stocks — banking, realty, and auto — today fell by up to 4 per cent after the Reserve Bank cut benchmark lending rate by 0.25 per cent as it failed to enthuse investors. Kotak Mahindra Bank slipped 1.39 per cent, IndusInd Bank (0.90 pc), SBI (0.37 pc), ICICI Bank (0.20 pc), Federal Bank (0.13 pc) and HDFC Bank (0.04 pc) on BSE.The BSE bank index fell 0.16 per cent to close the day at 28,356.31. Among auto stocks, Ashok Leyland dipped 1.71 per cent, Tata Motors (1.66 pc), TVS Motor Company (1 pc), Eicher Motors (0.84 pc), M&M (0.82 pc) and Bajaj Auto (0.74 pc).The BSE auto index was down 0.26 per cent at 24,784.10.Realty stocks also saw selling pressure, with Unitech falling 4.31 per cent, Sobha (2.28 pc), Godrej Properties (1.74 pc), Oberoi Realty (1.04 pc), Omaxe Ltd (0.64 pc) and DLF (0.23 pc).The BSE realty index closed 0.20 per cent down at 2,182.80.
The stock market, which had largely factored in the cut, declined. While the BSE index Sensex slipped from record high to end 98.43 points lower at 32,476.74, NSE’s Nifty fell 33.15 points to 10,081.50.”The market went through consolidation as 25 bps rate cut by RBI was on expected line but maintained the neutral stance, whereas the investor expected a change,” said Vinod Nair, Head of Research, Geojit Financial Services Ltd.”The 25 bps repo rate cut was on expected lines. The market has largely discounted this action and focus would now shift to global events and how they unfold going forward,” said Lakshmi Iyer, CIO (Debt) & Head – Products, Kotak Mutual Fund.
After a 10-month pause, the Reserve Bank today cut benchmark lending rate by 0.25 per cent to over 6-year low citing reduction in inflation risk, a move that will lower interest on home, auto, and corporate loans.The repo rate, at which RBI lends to banks, is now down to 6 per cent.