Interest rate-sensitive auto, realty, bank stocks rally after RBI policy decision

New Delhi: Interest rate-sensitive auto, realty and bank stocks on Wednesday rallied after the Reserve Bank of India changed its monetary policy stance to 'neutral', a move that may lead to a rate cut in the forthcoming policies.

Among auto firms, Tata Motors jumped 2.56 per cent, TVS Motor by 2.23 per cent, Maruti Suzuki India by 1.59 per cent, Apollo Tyres by 1.05 per cent, MRF by 0.98 per cent, and Hero MotoCorp by 0.76 per cent.

The BSE Auto index rose by 1.30 per cent to 60,068.09.

Realty stocks were also in demand, with Macrotech Developers soaring 4.60 per cent, Phoenix Mills by 4.37 per cent, DLF by 2.14 per cent, Mahindra Lifespace by 1.53 per cent and Godrej Properties by 0.56 per cent.

On the other hand, Sobha slipped 0.73 per cent on the exchange.

The realty index jumped 2.55 per cent to 8,249.24.

From the bank space, State Bank of India climbed 2.47 per cent, Axis Bank jumped 2.41 per cent, ICICI Bank by 1.54 per cent, Kotak Mahindra Bank rose 0.38 per cent, IndusInd Bank went up 0.31 per cent.

Meanwhile, Federal Bank declined 1.12 per cent, Bank of Baroda (0.61 per cent) and HDFC Bank (0.32 per cent).

The BSE Bankex index climbed 1.10 per cent to 58,439.15.

Among the NBFC stocks, Bajaj Housing Finance soared 4.01 per cent, Bajaj Finance jumped 2.56 per cent, Bajaj Finserv by 1.55 per cent, SBI Cards and Payment Services climbed 1.35 per cent, LIC Housing Finance by 0.88 per cent and Jio Financial Services went up by 0.06 per cent.

The BSE Financial Services jumped 77.29 points or 0.68 to trade at 11,523.34.

The 30-share BSE Sensex climbed 255.87 points or 0.31 per cent to 81,890.68. In the intraday trade, the equity benchmark index surged 684.4 points or 0.83 per cent to 82,319.21.

The Reserve Bank of India on Wednesday decided to keep the policy rate unchanged for the tenth time in a row but changed its stance to 'neutral' that may lead to a cut in the forthcoming policies.

RBI maintained the status quo despite the US Federal Reserve lowering the benchmark rates by 50 basis points last month. The central banks of some developed nations have also reduced their interest rates.

Announcing the fourth bi-monthly monetary policy for the current financial year, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 6.5 per cent.

The RBI has maintained status quo on benchmark interest rate since February 2023.

Further, RBI Governor Shaktikanta Das also warned of action against those non-banking financial companies (NBFCs) who are pursuing unsustainable practices to push growth.

In a strongly-worded statement while announcing the bi-monthly policy review, Das asked such NBFCs to be sincere, fair and follow sustainable practices.

According to Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, the RBI has shifted its stance from a "withdrawal of accommodation" to a "neutral" position while maintaining the repo rate at 6.5 per cent.

This decision signals a clear focus on domestic economic conditions, prioritizing them over aligning with the U.S. Federal Reserve's rate movements. The neutral stance provides the RBI with the flexibility to adjust interest rates in response to evolving inflation dynamics.

With one uncertainty out of its way, the market participants will now start focusing on earnings season. Indian markets are likely to continue their recovery after the six-day losing streak, Sheth added.