Positive Sentiment: Rate-sensitive stocks rise after RBI’s policy review

BSE Bankex rose 0.73% to hit record high; auto index too rose 0.70%

By: ENS Economic Bureau | Mumbai | Published:June 8, 2017 1:08 am

Shares of rate-sensitive companies rose marginally after the Reserve Bank of India (RBI) kept the benchmark repo rate unchanged and lowered its inflation target at its second bi-monthly monetary policy review for FY18 on Wednesday. Repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds. The BSE Bankex rose 0.73 per cent and hit a record high at 26,721.93. Barring one, all the constituents of the BSE Bankex posted gains.

Among the public sector bank stocks, Punjab National Bank rose the most by 1.77 per cent, followed by Bank of Baroda whose stock rose by 1.40 per cent. Shares of private banks like ICICI Bank, IndusInd Bank, and Axis Bank rose anywhere between 0.5 per cent to two per cent, with Federal Bank registering the biggest gain.

The BSE Realty index ended the session at 1,954.11. Indiabulls Real Estate led the pack of real estate stocks with 4.11 per cent gain. However, the largest real estate firm by market value, DLF, fell 0.43 per cent and ended the session at Rs 174.60 on the BSE.

The auto index also rose 0.70 per cent and closed at 24,251.06. Nine out of the 13 constituents of the Auto Index ended the session higher. Bharat Forge was the biggest gainer, the stock rose by 3.78 per cent and ended the session at Rs 1,210.30. The BSE Sensex also on Wednesday closed almost 81 points higher at 31,271.28, buoyed by the RBI’s status quo on policy rates and a revised estimate of a good monsoon.

“The market was volatile as the policy decision was consistent with their neutral stance, whereas investor expected a change. The policy will support banks to lend more due to the advantage of 50 bps cut in SLR. Moreover, revised estimation of monsoon to 98 per cent will increase the consumption patterns which also provide a positive sentiment to investors.” Vinod Nair, head of research, Geojit Financial Services Ltd said.

The BSE Sensex took off on a positive note at 31,252.71 and advanced to 31,346.99. Later, on profit booking, it slipped to touch a low 31,172.98 before ending 80.72 points, or 0.26 per cent, higher at 31,271.28. The gauge had lost 118.93 points in the previous session. The NSE Nifty, too, followed suit. After shuttling between 9,678.55 and 9,630.55, it finally settled 26.75 points higher at 9,663.90.

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