RBI MPC | Experts pick top 9 rate-sensitive stocks as RBI holds repo rate but revises Q1 GDP, inflation forecasts

The RBI’s Monetary Policy Committee, as expectedly, maintained the repo rate unchanged at 6.5 percent and remained focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.

The Reserve Bank of India held the full fiscal year growth forecast and inflation estimates at 7.2 percent and 4.5 percent, respectively, however, it revised GDP growth estimates for Q1FY25 downwards to 7.1 percent from 7.3 percent earlier, and CPI inflation forecast upwards to 4.4 percent from 3.8 percent earlier for the June FY25 quarter. The central bank still sees higher risks from volatile and elevated food prices, which may adversely impact inflation expectations and result in spillovers to core inflation, although there are also indications of core inflation bottoming out.

In the last reading i.e. for June, CPI inflation jumped to four-month high of 5.08 percent, against 4.75 percent in the previous month on higher food inflation. In fact, the food inflation stayed above 8 percent mark for the eighth consecutive month. This clearly indicates that the rates are likely to remain higher for longer, at least till the inflation consistently aligns to the 4 percent target on a durable basis.

Hence, the MPC reiterates the need to continue with the disinflationary stance, until a durable alignment of the headline CPI inflation with the target is achieved.

“This is in continuity with the stance of the governor and our expectations. This is what the markets have been expecting so I don’t see the interest rate decision moving markets,” Divam Sharma, Founder and Fund Manager at Green Portfolio said.

By maintaining the status quo, RBI is keeping up with its stance of balancing inflation and growth. It’s a positive thing that India, as an economy is able to stay relatively less affected by global cues, he believes.

According to Puneet Sharma, CEO and Fund Manager at Whitespace Alpha, the Governor’s hawkish tone suggests that a rate cut in the near future is less certain, reflecting a cautious stance in the face of inflationary risks. This decision reinforces the RBI’s strategy of cautious optimism, aiming for a stable and sustainable economic environment, he said.

The benchmark indices remained lacklustre after the RBI policy, while among rate sensitive sectors, Nifty Bank and Nifty Auto traded half a percent higher but Nifty Realty index was marginally down, at the time of writing this article.

The Nifty 50 was up 5 points at 24,303, and the BSE Sensex gained 16 points at 79,484, while the Nifty Midcap 100 and Smallcap 100 indices rose half a percent each.

Moneycontrol collated a list of top 9 rate sensitive stocks from experts with a 3-4-week perspective. The stock price of August 7 is considered for the calculation of returns:

Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors

Bajaj Finance | CMP: Rs 6,637

Bajaj Finance is forming classical triangle pattern since many years. The stock has been moving in a broad range and is on verge of completing the downtrend. As per Elliott wave triangle pattern consist of 5 waves, Bajaj Finance is in wave (E). Break above Rs 6,740 will indicate a possible reversal for a move to Rs 7,300 or higher. On downside, Rs 6,200 is important support which should remain intact. In a nutshell, long positions can be created above Rs 6,740 with Rs 6,200 as stop-loss for a target of Rs 7,300 followed by Rs 7,600 levels.

Strategy: Buy

Target: Rs 7,300, Rs 7,600

Stop-Loss: Rs 6,200

Axis Bank | CMP: Rs 1,136.80

Axis Bank is at important juncture. We can see the stock has shown impulsive down move consisting of 5 waves as per Elliott wave. Post its completion, we can expect upside reversal or short term retracement. As shown on hourly chart, break above Rs 1,160 will indicate that wave v is complete and move towards Rs 1,210 can be expected which is near 38.2 percent retracement level. On downside, important price action support is at Rs 1,110 levels.

In short, long positions can be created on hourly close above Rs 1,160 with Rs 1,110 as stop-loss for a target of Rs 1,210 followed by Rs 1,255 levels.

Strategy: Buy

Target: Rs 1,210, Rs 1,255

Stop-Loss: Rs 1,110

Federal Bank | CMP: Rs 192.70

Federal Bank shows strong impulsive rise with short term retracement in form of wave iv ongoing. Post completion of this we can expect up move to resume in form of wave v. Break above Gap area of Rs 197 will confirm this scenario for a move to Rs 208 levels as per Elliott wave. In short, Federal Bank has important support near Rs 187 levels. As long as same is intact, one can expect a move towards Rs 208 and maintain stop-loss of Rs 187 on downside.

Strategy: Buy

Target: Rs 208

Stop-Loss: Rs 187

Jigar S Patel, Senior Manager – Equity Research at Anand Rathi

Macrotech Developers | CMP: Rs 1,215.5

After reaching a peak near Rs 1,595, Lodha has experienced a significant decline, dropping nearly 450 rupees, which translates to a 28 percent decrease in its price. Currently, the stock has found support at its 200-day Exponential Moving Average (DEMA). Interestingly, a Bullish BAT pattern has emerged precisely at this 200 DEMA support level of Rs 1,218. Given these technical indicators, we recommend taking a long position in the stock within the price range of Rs 1,200-1,220. The potential upside target is set at Rs 1,350, while a stop-loss should be placed at Rs 1,140 on a daily closing basis to mitigate risk.

Strategy: Buy

Target: Rs 1,350

Stop-Loss: Rs 1,140

ICICI Bank | CMP: Rs 1,172.5

At the current juncture, ICICI Bank has found support within its previous breakout range and has maintained this level for the past three sessions. Additionally, an Alternate Bullish BAT pattern has formed on the daily chart precisely within this support zone of Rs 1,165-1,175, making the stock an attractive buy at these levels. This technical setup suggests a strong potential for upward movement. Therefore, we recommend buying ICICI Bank in the price range of Rs 1,165-1,175. The potential upside target is set at Rs 1,220, while a stop-loss should be placed near Rs 1,145 on a daily closing basis to manage risk effectively.

Strategy: Buy

Target: Rs 1,220

Stop-Loss: Rs 1,145

Riyank Arora, Technical Analyst at Mehta Equities

DLF | CMP: Rs 845.65

DLF, with support at Rs 800 and resistance at Rs 900, shows ongoing momentum with an RSI (Relative Strength Index 14) at 51. Wednesday’s trading volumes were nearly equal to its 30-day average, indicating the stock’s strength. The stock is trading well above important moving averages. A buy at the current market price (CMP) is recommended, with a stop-loss at Rs 800 and a target of Rs 900.

Strategy: Buy

Target: Rs 900

Stop-Loss: Rs 800

Maruti Suzuki India | CMP: Rs 12,371.50

Maruti has support at Rs 12,000 and resistance at Rs 13,000, with an RSI (14) at 45 suggesting potential momentum pickup. Wednesday’s session volumes were nearly the same as the 30-day average, showing robust trading activity. The stock is trading well above significant moving averages. Buying at the current market price is advised.

Strategy: Buy

Target: Rs 13,000

Stop-Loss: Rs 12,000

Pravesh Gour, Senior Technical Analyst at Swastika Investmart

Mahindra and Mahindra | CMP: Rs 2,680.85

M&M had given a breakout to a Flag formation and surged to an all-time high level of Rs 3,000. However, it has witnessed some profit booking from higher levels and has now retested its breakout level. Level-wise, the first support will be at Rs 2,615, a slip below this could lead to weakness towards the important support of the Rs 2,500. On the upside, the first hurdle is placed around Rs 2,800 level, with the 20 & 50 DMA placed above this. A rally could be witnessed towards Rs 3,000 mark.

Strategy: Buy

Target: Rs 3,000

Stop-Loss: Rs 2,500

HDFC Bank | CMP: Rs 1,623.5