Rate sensitive shares trade firm as RBI hikes repo rate by 50 bps to 5.4%

Shares of rate sensitive sectors like financials including banks, non-banking finance companies (NBFCs), housing finance companies (HFCs) and insurance companies, along with automobiles and real estate traded firm after the (RBI) hiked repo rate by 50 basis points to 5.4 per cent, while retained real gross domestic product (GDP) growth rate at 7.2 per cent for the current financial year 2022-23 (FY23).

At 10:38 am, Nifty Bank, Nifty Financial Services, Nifty PSU Bank, Nifty Private Bank, and Nifty Realty indices were up in the range of 0.45 per cent to 1 per cent. In comparison, the benchmark Nifty 50 index was up 0.33 per cent on the National Stock Exchange (NSE).

Nifty Auto index, however, was down 0.20 per cent, due to sharp decline in market price of Balkrishna Industries (down 6.5 per cent) on account of weak margin performance in June quarter. TVS Motor, Escorts, Bosch, Tata Motors, Mahindra & Mahindra and Tube Investments of India from the index traded in the green on the NSE.

Among individual stocks, ICICI Prudential Life Insurance Company, Cholamandalam Investment and Finance Company, Muthoot Finance, ICICI Bank, HDFC Life Insurance, Axis Bank, State Bank of India, Bank of India and Union Bank of India traded up to 3 per cent higher.

Meanwhile, Sobha, Macrotech Developers, DLF, Indiabulls Real Estate and Prestige Estate Projects from the real estate pack were up in the range of 1 per cent to 2 per cent on the NSE.

On Friday, the six-member Monetary Policy Committee of the decided to hike the repo rate by 50 basis points to 5.4 per cent, crossing the pre-pandemic level of 5.15 per cent. “MPC decided to focus on withdrawal of accommodation to keep inflation within target while supporting growth,” Governor said in his statement. CLICK HERE FOR DETAILS

As regards growth, the governor said that rural consumption is expected to benefit from the brightening agricultural prospects. “The demand for contact-intensive services and the improvement in business and consumer sentiment should bolster discretionary spending and urban consumption. Investment activity is expected to get support from the government’s capex push, improving bank credit and rising capacity utilization,” the said.

Firms polled in the Reserve Bank’s industrial outlook survey expect sequential expansion in production volumes and new orders in second quarter of FY23 (Q2FY23), which is likely to sustain through Q4, the RBI said.

“The MPC decisions have been in line with our expectations. Given the increasing external sector imbalances and global uncertainties the need for frontloaded action was imperative. We continue to see 5.75 per cent repo rate by Dec 2022,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

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