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Stocks of banks & other rate-sensitive sectors rally after RBI MPC announcements

Cheering the absence of any negative surprises and the retention of FY23 inflation projection at 6.7% by RBI MPC, rate-sensitive stocks like those of banks and financial services, auto and realty rallied on Friday.Nifty PSU Bank index rallied the most at 2.26% with Canara Bank, PNB and Bank of Baroda inching up 3-4% each. Nifty Bank was 1.87% higher with heavyweights HDFC Bank, Kotak Bank and SBI advancing 2% each.Samvardhana Motherson was the top gainer in the Nifty Auto index with a rally of nearly 4%. Other top gainers included Tube Investments, Bharat Forge and Eicher Motors.Among realty stocks, Phoenix jumped 2.5%, Indiabulls Real Estate 1.6% while Godrej Properties, DLF and Oberoi Realty were trading 1% higher.While increasing the repo rate by 50 bps to 5.9%, RBI Governor Shaktikanta Das said the MPC has decided to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.Investors also took note of Das's statement that the recent correction in global commodity prices including crude oil, if sustained, may ease cost pressures in the coming months."The relatively unchanged growth and inflation outlook by the RBI indicate that the policy arithmetic hasn’t materially changed for it, and the reluctance to change stance from ‘withdrawal of accommodation’ indicates that more monetary policy tightening is likely to be in the pipeline," said Aurodeep Nandi, India Economist and Vice President at Nomura.Stating that the rate hike was in line with market expectations,Anu Aggarwal, President & Head of Corporate Banking, Kotak Mahindra Bank said the rise in rates will slow down capex plans of corporate India which were just about kicking off.