Rate sensitive stocks spurt on RBI surprise

Tags: News
Interest-rate sensitive banking and realty stocks today hogged the limelight in an overall strong market, rising as much as 6 per cent, after the Reserve Bank unexpectedly decided to keep key policy rates unchanged.

Among the banking stocks, Canara Bank rallied 5.35 per cent, while Bank of India gained 5.32 per cent.

Besides, PNB rose by 4.31 per cent, Indusind Bank (3.65 per cent), SBI (2.67 per cent) and HDFC Bank (1.37 per cent).

Led by the increase in these stocks, the BSE Banking index gained 1.40 per cent to settle at 12,976.05.

From realty stocks, DLF surged 5.53 per cent, Indiabulls Real Estate (5.05 per cent), Parsvnath Developers (2.06 per cent) and Unitech (2.01 per cent).

Following the rally in these stock, the BSE Realty index rose by 3.51 per cent to close at 1,379.62.

"Against market expectations of a 25 bps hike, the policy repo rate remained unchanged at 7.75 per cent, with CRR/MSF kept unchanged as well. And when rates are at peak, or near-peak, every hike counts—the RBI's rate actions have surprised the market twice in a row—hiking then and pausing now," said Tirthankar Patnaik, Director-Institutional Research, Religare Capital Markets Limited.

"We believe expectations warrant another two quarters of macro pain, and as such expect the central bank to maintain its hawkish stance over the period. It's growth—or the lack of it—that would drive inflation down going forward, which remains a bigger risk," he added.

The Reserve Bank of India kept the short-term lending rate unchanged 7.75 per cent, against expectations of a 25 bps increase. The cash reserve ratio was maintained at 4 per cent.

According to Dinesh Thakkar, Chairman & Managing Director, Angel Broking: "The RBI keeping repo rate unchanged is a positive surprise, as markets were expecting at least a 25 bps hike in the repo rate. Inflation remains the key overhang, which if it declines as expected by us, will provide a further boost to rate sensitive sectors of the economy."

In the stock market, the BSE benchmark Sensex ended at 20,859.86, up 247.72 points or 1.20 per cent.

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