Rate sensitive stocks gained in intra-day deals on Thursday after the Reserve Bank of India kept the repo rate unchanged at 6.5 percent in a surprise move in the first bi-monthly policy for the new financial year, FY24.
Overall the market sentiment turned positive with the benchmark Sensex jumping over 150 points in trade after the policy announcement.
The Nifty Realty index surged the most, up 1.44 percent followed by the Nifty PSU Bank index, up 1.4 percent. Meanwhile, Nifty Bank and Nifty Financial Services also advanced 0.4 percent each and the Nifty Auto added 0.2 percent post the announcement.
In the realty index, all constituents were in the green with Godrej Properties rising the most, up 3 percent followed by Oberoi Realty and DLF, up 2.6 percent and 2.3 percent, respectively. Indiabulls Real Estate, Sobha, Phoenix Mills, Brigade and Prestige Estate also added more than half a percent each.
No change in the repo rate means no change in the home loan rates, which are raised by banks every time the RBI increases the repo rate. Hence, a pause in rate hikes might lead to a recovery in demand in the real estate space since home loan rates will not be tinkered with, at least this time.
In the PSU Bank index as well, all stocks were in the green with Bank of Maharashtra surging the most, 2.3 percent and Punjab National Bank advancing 2 percent. All other PSU Bank stocks were also trading over 1 percent higher.
The same was seen in the Nifty Financial Services index as well. Chola Finance rallied over 6 percent, the top performer in the index followed by IEX, up 5.5 percent. Bajaj Finance, SBI Cards, and REC also advanced over a percent each.
Among private lenders, IndusInd Bank jumped 1.5 percent and IDFC First Bank added 1 percent. While, Bandhan Bank, ICICI Bank, AU Small Finance Bank, and HDFC Bank were in the green, Axis Bank and Federal Bank remained in the red.
Finally, the auto sector was flat but in the green after the announcement. In this space, Ashok Leyland, Sona Comm, Eicher Motors, Bajaj Auto, M&M, and Tata Motors rose between 0.3 percent and 1.3 percent. On the other hand, Bosch, MRF, Motherson Sumi, TI India, Maruti and Hero Moto were in the red, down between 0.1 and 0.5 percent.
The MPC voted unanimously to keep the repo rate unchanged. It decided to take a pause after consecutive rate hikes in 6 previous policies. However, the governor highlighted that the MPC’s decision to pause repo rate is for this meeting only.
"While we have kept the policy rate unchanged, this decision was taken based on our assessment of the macroeconomic and financial conditions with reference to information available up to today. Our job is not yet finished and the war against inflation has to continue until we see a durable decline in inflation closer to the target," said Das.