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Rate sensitive stocks, including banks, non-banking housing finance companies (NBFCs), real estate and automobiles, were trading mixed after the Reserve Bank of India’s (RBI’s) monetary policy committee kept key interest rates unchanged and retained the ‘accommodative’ stance to help revive the economy. READ DETAILS HERE
At 11:09 am, the Nifty Bank, Private Bank, PSU Bank and Auto indices were up 0.20 per cent to 0.40 per cent, as compared to a 0.54-per cent rise in the Nifty50 index. On the downside, the Nifty Realty index was down 2.2 per cent on profit booking.
Bandhan Bank, AU Small Finance and RBL Bank were up in the range of 1 to 4 per cent, while Union Bank of India, Canara Bank and Punjab National Bank were trading in red on the National Stock Exchange (NSE).
In the automobile pack, Tata Motors, TVS Motor and Eicher Motors were up 1 per cent, while Mahindra & Mahindra, Ashok Leyland and Maruti Suzuki India down less than 1 per cent on the NSE. Among the real estate players, Godrej Properties, Sobha, Oberoi Realty, Sunteck Realty, DLF and Brigade Enterprises slipped between 2 per cent and 5 per cent.
“The credit policy is neutral to positive as the market was already expecting that interest will remain unchanged but the market is cheering on fact that there is no change in stance while ending G-sec Acquisition Programme (GSAP) is a little negative surprise but the governor’s comment that he is ready to resume GSAP if there will be a requirement. The governor is confident about growth and didn’t show much worry about inflation therefore the market is witnessing a bullish momentum post policy,” Santosh Meena, Head of Research at Swastika Investmart said in a statement.
The RBI’s stance on liquidity management was the most watched for. As we expected, the RBI did not shock the system with a reverse repo hike, and the policy is well used as a lever to prepare markets for a gradualist approach toward normalization through both communication and action, said Madhavi Arora, Lead Economist, at Emkay Global Financial Services.
While the tenor and quantum of variable reverse repo rate (VRRR) have increased, RBI has moved a step ahead by reducing further active liquidity infusion by not announcing new GSAP calendar after sterilising earlier two instalments with a simultaneous sale of bonds (OTs). While GSAPs may discontinue or get shallow and sterilized ahead, other tools like possible higher intervention via the FX forwards route, and partly rolling over its maturing forwards book will remain preferred tools for liquidity management ahead.
“We do not see the RBI deploying any direct tightening tools like MSS, CRR hikes, FX swaps or outright OMO sales in the coming quarters. Instead, we expect the RBI to let natural stabilizers like increased credit offtake and high CIC etc. to reduce the liquidity surplus,” Arora added.
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