Rate sensitive stocks such as banks, real estate stocks rallied after the Monetary Policy Committee (MPC) decided to keep the policy rates and cash reserve ratio (CRR) unchanged.
The policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 percent. The reverse repo rate under the LAF is at 6.0 percent, and the marginal standing facility (MSF) rate and the Bank Rate are at 6.50 percent.
Real estate stocks rallied after the Reserve Bank of India (RBI) said that it plans to allow banks to invest in REITs and InvITs.
"Allowing banks to invest in REITs is a big positive for realty stocks and we are already witnessing a bullish run up in them," Mustafa Nadeem, CEO, Epic Research told moneycontrol.
"We also expect market to react maturely as it has survived and continued the bullish move in past and same is expected now with any correction being short-lived and overall momentum to continue," he said.
MPC in the document said that it will be the Reserve Bank’s endeavour to put the resolution of banks’ stressed assets on a firm footing and create congenial conditions for bank credit to revive and flow to productive sectors of the economy which helped banks pare losses.
At 02:50 p.m. the BSE Banking index was trading 0.28 percent lower, the BSE Realty index was trading 2 percent higher, BSE capital goods index was trading 0.4 per cent lower, and BSE auto index was down 0.21 percent.
The S&P BSE Banking index was trading 0.28 per cent lower, led by losses in Federal Bank (down 2.3 percent), followed by ICICI Bank (down 1.4 per cent), SBI down 1.1 percent), and Yes Bank (down 0.3 per cent).
The BSE Realty index was trading 2 per cent higher led by gains in DLF (up 3.8 per cent), Unitech (up 3.4 percent), and Prestige Estate (up 2.7 per cent).The BSE Auto index was trading 0.2 per cent lower, led by losses in Eicher Motors (down 1 per cent), Maruti Suzuki (down 0.8 percent), and Ashok Leyland (down 0.8 per cent).