Here are the sectors and stocks in focus as RBI cuts repo rate

A recent poll of economists, bank treasury heads, and market experts by Moneycontrol had also showed that majority expect the RBI, under the new governor Sanjay Malhotra, to announce a rate cut.

Sectors such as consumer durables, financials, NBFCs, auto, housing finance, and consumption are likely to be in focus today as the Reserve Bank of India (RBI) announced the much-expected rate cut.

A recent poll of economists, bank treasury heads, and market experts by Moneycontrol had also showed that majority expect the RBI, under the new governor Sanjay Malhotra, to announce a rate cut.

With the recent liquidity injection by the Reserve Bank of India (RBI) and rising market optimism, a rate cut by the RBI could result in positive sentiment across sectors.

Financials and NBFCs
According to Ananth Rathi's Head of Research Narendra Solanki, financials and NBFCs are directly impacted as liquidity conditions improve. With cheaper credit available, small finance banks, which have a higher proportion of unsecured lending, are expected to see increased interest.

On the other hand, large private banks are likely to be resilient and focus on improving their balance sheet quality. Motilal Oswal Financial Services’ Sneha Poddar is of the view that companies with a higher fixed-rate portfolio will see a greater impact. Bajaj Finance and Shriram Finance are some of the companies that could benefit the most.

Auto

Shrikant Chouhan, Head of Research at Kotak Securities sees benefits for the auto sector. "The auto sector will be among the first beneficiaries, with two-wheelers leading the pack, followed by budget-friendly car manufacturers like Maruti," he says. Lower loan rates will encourage consumer spending in both rural and urban markets. Two-wheeler stocks like Hero Motorcorp and TVS Motors could gain.

Consumption and Durables

With the RBI supporting liquidity and consumer spending, companies in the consumption sector stand to benefit. "Consumption has been lagging for the past two quarters, especially in urban areas. Companies catering to urban consumption should see some action," said Solanki. Sectors like consumer durables, including companies such as Voltas and Havells are expected to gain as financing costs drop, boosting sales of household goods.

Real Estate

"Interest rate cuts will spur activity in the affordable and mid-range housing segments, as lower EMIs make home purchases more attractive," Chouhan added. The real estate sector, which has seen strong demand despite rising prices, is likely to receive further momentum from cheaper home loans.

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