Shares in rate-sensitive sectors such as banking, finance, auto, and real estate are seeing a stable session after the Reserve Bank of India’s (RBI) policy decision. The most striking impact is seen in the banking space.
The Nifty Bank index was higher at 50,243.45. It recovered 611 points intra-day. The bank nifty index has bagged mixed returns in the last 1 month. In the past one week the bank nifty has plunged over 2.69% which was further continued and posted a negative return of 4.26% in the last one month
Meanwhile the auto index traded lower at 24,905.05. Similarly, the NSE Realty Index edged 0.10% lower to 1,017.95. The Nifty 50 index was down 0.25% at 24,237.95.
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Within the real estate sector, Prestige Estates Projects Ltd. and Sunteck Realty Ltd. were notable gainers, both rising over 2% on the National Stock Exchange (NSE).
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In banking, private sector banks showed varied performance. Federal Bank was up about 1%, and HDFC Bank gained 0.44%, while Axis Bank, ICICI Bank, and Bandhan Bank saw declines of up to 1%.
In the automobile sector, Tata Motors and Samvardhana Motherson International climbed over 1%, whereas MRF, Maruti Suzuki, and TVS Motor Company traded lower following the RBI’s policy announcement.
RBI Keeps Repo Rate Unchanged
The RBI Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.5% for the ninth consecutive time, aligning with expectations from a CNBC-TV18 poll and other market forecasts. The decision was made with a 4:2 majority, and the MPC will continue focusing on the “withdrawal of accommodation.”
What are Inflation and Growth Forecasts?
RBI Governor Shaktikanta Das noted that headline inflation increased in June, driven by persistent food inflation. He indicated that the moderation in headline inflation, attributed to a favorable base, is likely to reverse in the third quarter of the financial year.
The RBI has also maintained its GDP growth forecast for FY25 at 7.2%, up from 7% in the previous policy review. The inflation forecast for FY25 remains unchanged at 4.5%.
Experts on Policy Outcome
Commenting on the outcome V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that the status quo in policy rates and stance were on expected lines. The Governor emphasised the need for vigilance on the inflation front saying “price stability is necessary for sustained growth.
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Vijayakumar also added there is nothing in the policy that will influence the market much. The market will be focused on the US jobs data today and the market’s response to it and the recession fears in the US.
Whereas commenting on the same Atul Parakh, CEO of Bigul, said that the Reserve Bank of India maintained its policy repo rate at 6.50%, focusing on controlling inflation, which rose to 5.1% in June. This decision aligns with economists’ expectations and reflects the central bank’s cautious approach.
“Despite solid economic growth, the RBI remains committed to its inflation target of 4% with a tolerance level of 2% above and below that level. The bank’s stance suggests a continued focus on price stability over immediate rate cuts, given the recent history of rate hikes and the current economic climate,” Parakh added.
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