After the Reserve Bank of India’s Monetary Policy Committee (MPC) decided to keep key interest rates unchanged, rate-sensitive stocks ended lower.
Rate sensitives are usually the ones who are directly impacted by the central bank’s decision on key interest rates. Hence, automobiles, banks, and real estate are the major ones to be kept an eye on.
The Reserve Bank of India (RBI) Wednesday kept its key lending rate—the repo rate—unchanged at 6 percent, but warned about lurking inflation worries in the new year, amid signs that costlier food and fuel prices could pinch household budgets.
The six member Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, ignored calls from business leaders to cut interest rates to boost investment and accelerate growth in the broader economy that has shown signs of revival in the last few months.
The MPC felt India’s retail inflation, which was galloping towards the RBI’s tolerable 4 percent threshold driven by costlier vegetables, need to be firmly bottled up first before lowering loan costs.
While banks and auto sectors were trading lower, real estate was trading in the green.
The BSE Bankex was trading lower by 0.84 percent, with frontline stocks such as State Bank of India, Punjab National Bank, Bank of Baroda, ICICI Bank and Axis Bank, among others, trading up to 2 percent lower. Meanwhile, the Bank Nifty was down 0.80 percent. Barring Federal Bank and Kotak Bank, all other major banks were trading in the red, with SBI down about 2 percent.
Meanwhile, in the auto space, the BSE auto and NSE Auto index was down about 0.6 percent. Maruti Suzuki, Ashok Leyland, and Bharat Forge were the top gainers among both indices, but major stocks such as M&M, MRF, Eicher Motors, Bajaj Auto and Bosch were down up to 3 percent.
In the real estate space, the BSE and NSE realty index traded lower by around 0.3-0.5 percent. They gave up their gains from the morning session. Sobha
were up around 1 percent. But stocks such as Prestige
and Indiabulls Real Estate
were trading weak.