Bank, realty and auto stocks today surged up to 7 per cent as the new RBI Governor Urjit Patel-led panel marked its debut policy review with a surprise 0.25 per cent rate cut. Among bank stocks, State Bank of India rose by 1.59 per cent, followed by PNB (1.57 per cent), Federal Bank (1.07 per cent) and Yes Bank (0.97 per cent) on BSE.
Shares of ICICI Bank went up by 0.84 per cent and Bank of Baroda 0.62 per cent.
Consequently, the BSE bank index ended the day at 22,491.47, up 0.42 per cent.
Among realty scrips, NBCC surged 7.33 per cent, Oberoi Realty gained 3.84 per cent and Unitech went up by 1 per cent.
The realty index rose by 0.96 per cent to close at 1,572.61.
From auto space, shares of Tata Motors advanced by 1.60 per cent, followed by Bajaj Auto (0.63 per cent), and Hero MotoCorp (0.24 per cent).
The auto index ended flat at 22,786.81, up 0.05 per cent.
Home, auto and corporate loans may get cheaper as the newly constituted Monetary Policy Committee marked its debut policy review with a surprise 0.25 per cent rate cut –lowering borrowing cost to 6-year low, which the industry lauded as a pre-Diwali gift.
“Overall, the policy was largely balanced in its nature. RBI has cut repo rate but has also sounded cautious about inflation in the coming months.
“The policy is largely positive for domestic bond markets in the near term. However, we shall have to watch the incoming data prints regarding inflation to estimate how RBI nuances its policy in the coming time,” said Killol Pandya, Head Fixed Income, Peerless Funds Management.
In independent India’s first collective interest rate setting decision, the six-member Monetary Policy Committee, which has three members nominated by the government and the rest from the Reserve Bank, lowered repo rate to 6.25 per cent from 6.50 per cent.
“After a long time, there seemed to be a narrower gap between those expecting a rate cut and those who didn’t. So the 25 bps cut in the repo rate did not surprise markets and we believe this would generally have a neutral impact.
“We may see intra-day volatility, but thereafter we expect the focus to shift to real economy and corporate earnings,” said Arun Gopalan, Vice President, Research at Systematix Shares & Stocks.
Following the rate cut, the BSE benchmark Sensex closed up by 91 points at 28,334.55.