Dec 06, 2017 11:52 AM IST | Source:

Rate sensitive stocks trade mixed ahead of RBI’s MPC meet outcome

While banks and auto sectors were trading lower, real estate was trading in the green.

Ahead of the outcome of Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday, rate-sensitive stocks were largely trading cautious in the build up to the event.

Risks to inflation, stable growth, and uncertainty ahead are likely to keep the Reserve Bank of India away from changing the key policy repo rate from the current 6 percent in its monetary policy review on Wednesday.

Though it needs to be seen if the central bank would go against popular perception to cut interest rates as the growth still remains at sub potential levels.

However, even as the policy itself, which is the fifth for the current financial year, may remain a non-event as most experts predict a status quo, the direction and language of the policy statement will be crucial.

Saugata Bhattacharya, Chief Economist at Axis Bank, told Moneycontrol, “One of key drivers for a status quo on inflation as there is still too much uncertainty at least for a couple of months more… I think the important point would be the verdict, the language of the monetary policy which will signal and indicate the way forward of where are we headed from here.”

According to him, the voting pattern of the monetary policy committee (MPC) members will be crucial on the stance going ahead.

The six-member MPC, chaired by the Reserve Bank of India Governor Urjit Patel, will meet on two days – December 5 and 6 – to decide on the movement of key interest rate going forward.

The resolution of the MPC will be placed on the website at 2.30 pm on December 6.

Such stocks 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.

While banks and auto sectors were trading lower, real estate was trading in the green.

The BSE Bankex was trading lower by 0.40 percent, with frontline stocks such as State Bank of India, Punjab National Bank, Axis Bank, among others, trading up to 2 percent lower. Meanwhile, the Bank Nifty was down 0.35 percent. Barring Federal Bank, Kotak Bank and Yes Bank, all other major banks were trading in the red, with SBI down about 1 percent.

Meanwhile, in the auto space, the BSE auto and NSE Auto index was down about 0.2 percent. Bharat Forge was the top gainer among both indices, but major stocks such as M&M, MRF, Eicher Motors and Bajaj Auto were down upto 1 percent.

In the real estate space, the BSE and NSE realty index was up 0.3-0.5 percent. Sobha, DLF, Oberoi Realty and Indiabulls Real Estate were up 0.2-2 percent.
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