Rate sensitive stocks turn choppy after RBI holds rates

By: |
Mumbai | Updated: February 3, 2016 2:27:57 AM

In line with expectation of most economists, the Reserve Bank of India (RBI) left the key policy rates unchanged on Tuesday. While the markets were impacted by the weak sentiment in Europe, the rate-sensitive indices – BSE Bankex, Realty and Auto – declined between 1.30% and 1.75%.

In line with expectation of most economists, the Reserve Bank of India (RBI) left the key policy rates unchanged on Tuesday. While the markets were impacted by the weak sentiment in Europe, the rate-sensitive indices – BSE Bankex, Realty and Auto – declined between 1.30% and 1.75%.

The RBI left the repo rate unchanged at 6.75% and the cash reserve ratio was retained at 4%.

The BSE Bankex fell by 291.46 points and each of the 10 bank stocks ended up in red, falling between 0.50% and 3.10%. Major movers in the Bankex were ICICI bank,
Axis bank, Kotak Mahindra Bank and State Bank of India (SBI), which lost between 2% and 3%.

In its report on the banking sector, brokerage Deutsche Research said with the RBI now wanting lenders to clean up their books, the likely credit costs which were supposed to be spread over the next three years will have a much higher incidence in FY16/FY17 and may be higher than usual.

Kotak Institutional Equities (KIE) in its policy review said as widely expected the RBI kept the policy rate unchanged. However, the stance of the monetary policy continues to remain accommodative, with the RBI keenly watching evolution of inflation and contours of the upcoming Budget for further policy actions. The RBI noted that structural reforms in the Budget will create room for further monetary easing.
IB Real Estate, DLF and Unitech fell by 5.08%, 3.51% and 1.80%, respectively. Sobha was the only realty stock that ended up (1.17%). The realty index was dragged down 1.71% amid weak demand and high inventory, while the unchanged rates capped the momentum of real estate stocks.

The auto index on the BSE ended down 1.39% or 236.75 points. Cummins India, Motherson Sumi, Bharat Forge and Tata Motors lost between 2.56% and 4.87%, while Bajaj Motors and Eicher gained 1.48% and 0.82%, respectively.

According to KIE’s annual preview across sectors, most auto companies will benefit from decline in commodity prices and some companies will benefit from operating leverage led by strong volume growth.

g 5

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Quick Heal fixes IPO price band at Rs 311-321; issue on Feb 8
2Gold firms up to 3-month high amid wedding season buying
3Tech Mahindra shares fall over 4% post Q3 numbers