The Monetary Policy Committee has maintained the repo rate unchanged at 6.5 percent in its bi-monthly review, while continuing to keep a close vigil on the evolving inflation and growth outlook.
Five of the six-member committee voted in favour of maintaining withdrawal of accommodation stance to ensure that inflation progressively aligns with the target, while supporting growth.
The interest rate decision by MPC is on expected lines, though few experts were expecting a possibility of change in policy stance to neutral.
The MPC took note of the moderation in CPI headline inflation in March-April into the tolerance band, in line with projections, reflecting the combined impact of monetary tightening and supply augmenting measures.
Headline inflation is projected to decline in 2023-24 from its level in 2022-23 but would still be above the target, warranting continuous vigil, said the RBI, adding the progress of the south west monsoon is critical in this regard.
The central bank lowered its FY24 inflation projection to 5.1 percent from 5.2 percent earlier, and also to 4.6 percent from 5.1 percent for Q1FY24 and to 5.2 percent against 5.4 percent for Q2FY24.
"As the RBI expects inflation to remain within its target range for the rest of the fiscal year, and with growth faring reasonably well, we think the RBI will stay on hold through the rest of FY24," Rahul Bajoria, MD and Head of EM Asia (ex-China) Economics at Barclays, said.
RBI governor Shaktikanta Das in his policy address emphasised the need to bring down the CPI inflation to its 4 percent target consistently, saying that inflation being within the tolerance band itself was “not good enough”, Rahul pointed out.
The cumulative rate hike of 250 basis points undertaken by the MPC is transmitting through the economy and its fuller impact should keep inflationary pressures contained in the coming months, the RBI said.
Also read: Market in see-saw mode post-RBI policy, here are the key factors at play
The central bank has maintained its current financial year growth projection at 6.5 percent, while expecting the real GDP growth for Q1FY24 at 8 percent and 6.5 percent for Q2FY24.
The market seems to have already reacted to the MPC move as the benchmark indices rallied sharply in previous session to hit the highest level of current calendar year. Today, the Nifty and Sensex turned volatile with trading in small range.
After the RBI policy decision, we collated 10 rate sensitive stocks that can deliver healthy double-digit return in the short-to-medium term from its closing price on June 7.
Also read: MPC retains repo rate at 6.5%, sounds caution on inflation
Expert: Milan Vaishnav, CMT, MSTA, Founder and Technical Analyst of Gemstone Equity Research
State Bank of India: Buy | LTP: Rs 589.20 | Stop-Loss: Rs 480 | Target: Rs 690-720 | Return: 22 percent
SBI has maintained a long-term upward trend, but recently it consolidated and formed a bearish Head and Shoulder pattern on the weekly chart. However, this pattern was invalidated after a pullback from Rs 490-500 levels.
Currently, the stock presents an entry opportunity for investors as it has undergone consolidation for a few weeks.
Investors can enter or hold this stock with a medium-term investment horizon, targeting a price range of Rs 690-720 in the next few months. It is advisable to maintain a stop-loss at Rs 480.
Larsen & Toubro: Buy | LTP: Rs 2,315.5 | Stop-Loss: Rs 2,050 | Target: Rs 2,600-2,675 | Return: 15.5 percent
Despite facing challenges from interest rate hikes, L&T, a major player in the infrastructure sector, has performed well and remains in a strong uptrend. While the stock has traded within a wide range recently, it shows promising signs for the future.
Technically, it is poised for a breakout above Rs 2,320-2,340 levels. Investors holding the stock can continue to do so, and those considering entry may do so at the current levels, with a medium-term perspective.
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The stock has the potential to reach Rs 2,600-2,675 levels in the coming months, but a drop below Rs 2,050 would invalidate this technical setup.
Expert: Anand James, Chief Market Strategist at Geojit Financial Services
Prestige Estates Projects: Buy | LTP: Rs 526.1 | Stop-Loss: Rs 475 | Target: Rs 560-620 | Return: 18 percent
Unliked the several recovery attempts that we saw since 2021, the botting pattern of 2023 and the multitude of continuation patterns, signals that a strong uptrend has been in formation.
MACD’s (moving average convergence divergence) push above zero line from below, and a triangle breakout, both in monthly charts also point the strength and breadth of the uptrend that is now in play after a multi-year consolidation.
Oberoi Realty: Buy | LTP: Rs 980.95 | Stop-Loss: Rs 895 | Target: Rs 1,060-1,250 | Return: 27 percent
The pull back from the record peak of 2022, having not stretched much lower, the consolidation thereof took a rounding pattern, reflecting the underlying strength.
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Though daily charts are yet to show a clean break, longer periodicities are beginning to portray a better story. A potential signal line break in MACD and a triangle breakout, both in monthly charts, signals bullish continuation.
Godrej Properties: Buy | LTP: Rs 1,446.45 | Stop-Loss: Rs 1,355 | Target: Rs 1,520-1,660 | Return: 15 percent
Having lost more than 60 percent in under 2 years after hitting record peak in 2021, a strong recovery is in play. Bounce from 78.6 percent Fibonacci retracement level in monthly time frame has set off a wedge breakout that is now in the third month.
Congestion resistance near Rs 1,500 may see some rejection trades, but dips to Rs 1,420 may continue to be bought.
Expert: Vidnyan Sawant, AVP - Technical Research at GEPL Capital
Can Fin Homes: Buy | LTP: Rs 749.45 | Stop-Loss: Rs 680 | Target: Rs 900 | Return: 20 percent
Can Fin Homes has demonstrated remarkable resilience, maintaining a steady upward trajectory since June 2017, when it began its ascent from Rs 719 level. The stock has consistently acknowledged and honored this price level, reflecting the stock's enduring strength and stability.
The breakout of Inverse Head & Shoulder Pattern in late May 2023 Indicates beginning of the Trend to the upside. The RSI (relative strength index) has shown a breakout too reflecting presence of positive momentum.
Also read: This investment manager says market underestimating India’s growth, sees FY24 GDP above 6%
Going ahead we can expect the up move to continue till Rs 900 level, where the stop-loss must be Rs 680 on closing basis.
Bajaj Finance: Buy | LTP: Rs 7,079.95 | Stop-Loss: Rs 6,850 | Target: Rs 7,800 | Return: 10 percent
The stock has shown a bounce to the upside from crucial support of Rs 5,550 where a change in the polarity can be found. The breakout of Double Bottom pattern in early May 2023 indicated beginning of the trend to the upside.
The RSI on Weekly is rising and have sustained well above 50 mark reflecting the Rising momentum in the prices. Going ahead we expect the prices to move higher till Rs 7,800, where stop-loss must be Rs 6,850 on the closing basis.
Axis Bank: Buy | LTP: Rs 976.75 | Stop-Loss: Rs 930 | Target: Rs 1,100 | Return: 13 percent
The stock has shown a change in the polarity around Rs 830 level which illustrates the rising bullish sentiment behind the prices. The recent breakout of the Rounding Bottom pattern indicates beginning of the trend to the upside.
The stock is above key moving averages of 50, 100 & 200-day EMA (exponential moving average) which confirms the presence of uptrend.
Going ahead we expect the prices to move higher till Rs 1,100, where the stop-loss must be Rs 930 on the closing basis.
Expert: Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities
DLF: Buy | LTP: Rs 495.70 | Stop-Loss: Rs 445 | Target: Rs 520-650 | Return: 31 percent
The stock is forming a rounding bottom formation on a monthly chart. Recently it has broken the resistance zone which was at Rs 447, which has not allowed the stock to trade above the same for a period of 14 years.
In brief, the stock is in the long-term breakout mode and we can expect a minimum of Rs 520 and a maximum of Rs 650 in the long run, which is its 50 percent retracement resistance of the entire fall. Buy in 2 parts, with a stop-loss at Rs 445.
Canara Bank: Buy | LTP: Rs 315 | Stop-Loss: Rs 295 | Target: Rs 330-350 | Return: 11 percent
The stock is forming a triangle formation, which is a continuation formation for the prevailing trend, which is bullish and upward.
Technically, we can expect Rs 330 and Rs 350 in the near term. Buy 50 percent at the current levels and the balance at Rs 305 which is the lower boundary of the triangle. For the same, one can keep a stop-loss at Rs 295.
HDFC Bank: Buy | LTP: Rs 1,607.70 | Stop-Loss: Rs 1,570 | Target: Rs 1,680-1,700 | Return: 6 percent
Currently, the stock is available at a major support zone, which is between Rs 1,600 and Rs 1,575. The 200-day EMA is also at Rs 1,584, which would offer significant support to the stock if it corrects.
On the higher side, the resistance is in the range of Rs 1,680-1,700 levels, which is a decent upside with a medium-term view. It’s a buy at current levels and more on dips with a stop-loss at Rs 1,570.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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