Rate sensitive stocks see mixed trading as RBI keeps repo rate unchanged

Indian equity benchmarks were trading higher on Thursday as investors cheered the Reserve Bank of India’s monetary policy decision. The RBI’s monetary policy committee (MPC) has decided to maintain the status quo on the key policy repo rate at 6.5%.

Following the MPC policy announcement, rate-sensitive stocks saw mixed reactions with financial services and banking stocks witnessing buying whereas auto and realty stocks seeing marginal selling pressure. At the time of reporting, BSE Bankex Index was trading 0.12% higher at 50,354, whereas BSE Financial Services Index surged as much as 0.44% at 9,273.66. Amongst banking counters, index heavyweights such as SBI, HDFC Bank, ICICI Bank and Yes Bank were trading higher at 0.7%, 0.89%, 0.88% and 2.91% respectively.  

BSE Auto index slipped by 0.4% with index heavyweight Maruti Suzuki, Tata Motors and Mahindra & Mahindra falling upto 0.8%. BSE Realty Index slipped 0.76% with index heavyweights such as Lodha Group, DLF and Godrej Properties falling upto 2%.

Commenting on the development, Arun Puri, Chairman, Anarock Group said, "As was anticipated, the RBI has decided to keep the repo rates unchanged at 6.5%. This gives some respite to prospective homebuyers looking to avail of home loans in the near future. The unchanged repo rate can help maintain the momentum in housing sales, which has so far been firing on all cylinders in 2023."

"Given the current unchanged rates, the outlook for those looking to buy their first home via a home loan soon remains favourable. Interest rates from most banks will continue in the single digits. With top banks, they currently hover between 8.7 to 9.65%. A future rate hike, if any, may push the rates into double digits. The persisting financial instabilities in advanced economies of the world may have repercussions in India, causing the RBI to take such a step to face these headwinds," he added.

The MPC, which began its meeting on June 6, 2023, also decided to keep the marginal standing facility and bank rates unchanged at 6.75% while the standing deposit facility rate has been pegged at 6.25%, said RBI governor Shaktikanta Das.

The MPC's policy stance remains focussed on "withdrawal of accommodation" to ensure that inflation progressively aligns with the target while supporting growth, Das said.

According to the Reserve Bank of India estimates, the economic growth for the first two quarters will increase, and it has cut the estimates for the last two quarters of the fiscal year. The country's gross domestic product (GDP) is estimated to grow at 6.5% in 2023-24, with real GDP in Q1 forecast to grow at 8%, Q2 at 6.5%, Q3 at 6% and Q4 at 5.7%.