Shares of automobile players like Maruti Suzuki, Eicher Motors, M&M and Tata Motors declined up to 2 percent on February 8 after the Reserve Bank of India's (RBI's) policy announcement.
The RBI's monetary policy committee (MPC) kept repo rates unchanged at 6.5 percent for the sixth straight time.
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The Nifty auto index has gained over 7 percent, so far, this year against a 1 percent rise in the benchmark Nifty.
RBI Governor Shaktikanta Das maintained policy to "withdrawal of accommodation" in the first monetary policy meeting of 2024. For the latest on the RBI policy meet 2024, click here
Governor Das kept the inflation forecast for 2023-24 unchanged at 5.4 percent. However, the projection for the current quarter was revised downward to 5 percent from the previous estimate of 5.2 percent.
The RBI MPC's decision comes as India's inflation rate has remained below 6 percent for four consecutive months since September 2023. However, it still falls short of the 4 percent target. In December 2023, the retail inflation rate stood at 5.69 percent.
"Rural demand continues to gather pace, urban consumption remains strong and investment cycle is gaining steam on the back of increased capex," the RBI Governor Shaktikanta Das highlighted.
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Das mentioned that domestic economic activity continues to exhibit strength, with growth for the current fiscal year estimated at 7.3 percent according to the NSO.
The projected real GDP growth for 2024-25 stands at 7 percent, with growth rates of 7.2 percent and 6.8 percent anticipated for the June and September quarters, respectively.
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