Shares of rate-sensitive sectors firmed their gains on Friday after the Reserve Bank’s (RBI) monetary policy meeting. The six-membered monetary policy committee (MPC), led by RBI Governor Shaktikanta Das, maintained status quo and decided to keep the interest rates unchanged at 6.5 per cent for the fourth time by a 5:1 majority.Following the announcement, shares of rate-sensitive sectors like banking, financial services, automobile and real estate posted strong gains after the announcements. Nifty Financial Services, auto, PSU Bank, private bank and realty indices gained about a per cent each after the announcement.Markets have touched new highs, especially with earnings for the first quarter coming healthy supporting the trajectory. Investors are bullish as they are favouring rate cuts in 2024 which will unanimously boost the equity markets, said Anil Rego, Founder and Fund Manager at Right Horizons.
“The banking sector is the most sensitive to changes in rate cycles and has been a major reason for incremental earnings in FY23 and the first quarter of FY24 benefitting from the hikes and credit growth being robust and persistent. NBFCs will be best positioned to benefit from cuts in rates. Credit-sensitive sectors like auto and real estate will see higher demand,” he added.However, not all analysts are going gung-ho over the stable interest rates as they believe that move was already priced in and longer high interest rates do not bode well for the Street.With food and energy prices being volatile, and RBI keeping vigilance to ensure an inflation target of 4 per cent, rate cuts taking longer than expected. A status quo is largely a non-event for the markets, said Divam Sharma, Founder and Fund Manager at Green Portfolio.Among the financial sectors, Bajaj Finserv gained about 4 per cent to Rs 1,599, while ICICI Lombard GIC gained about 3 per cent to Rs 1,326. REC, HDFC Life Insurance Company, Bajaj Finance and HDFC Asset management Company added about 2 per cent each during the trading session.
In the PSU Banking space, Jammu & Kashmir Bank gained as much as 8 per cent to Rs 115.90, hitting new-52-week highs. Canara Bank, State Bank of India and Bank of Baroda led the rally, rising up to 2 per cent. However, profit booking in the state-run leaders dented the sentiments.Among the private lenders, RBL Bank rose over 2 per cent to Rs 249, while IndusInd Bank also rose about 2 per cent to Rs 1,420.50 during the day. Bandhan Bank and City Union Bank were up about a per cent each, while heavyweights on the index such as HDFC Bank and Axis Bank were also firm, trading in green.Among the auto counters, Bharat Forge gained more than 2 per cent to Rs 1,094.70, while Tata Motors also posted similar gains to Rs 627.35. MRF, TVS Motors, Bosch, Mahindra & Mahindra, Maruti Suzuki, Baja Auto and Hero MotoCorp also gained about a per cent each during the day.With core inflation in check and the cautious approach taken by the apex bank, we anticipate a promising festive season for the real estate market, said Nitin Bavisi, CFO, Ajmera Realty and Infra. “This favorable environment will stimulate demand, benefiting both homebuyers and developers across all segments,” he said.
In the real estate space, Godrej Properties jumped about 2 per cent to Rs 1,629.30, while Brigade Enterprises also climbed on the similar lines to Rs 591.35. Prestite Estate Projects was also up 2 per cent, while DLF, Phoenix Mills and Macrotech Developers added about a per cent each.In consideration of the upcoming election year, it is projected that efforts will be made to keep inflation under control, said Ravi Singhal, CEO. GCL Broking. “Moreover, a significant drop of 16% in crude prices from its peak is anticipated, which is poised to aid in managing core inflation,” he added.
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