ALSO READRate sensitive shares end firm post RBI policy Rate sensitive stocks settle lower as RBI maintains status quo on rates Nifty ends 1.2% higher, Sensex up 352 points; auto, realty indices gain Sensex ends 174 pts higher, Nifty above 9,900 post RBI policy outcome Markets end volatile day flat, Nifty dips below 10150 ahead of RBI policy
Banks trade mixed, while shares of automobiles and real estate companies trading firm ahead of the Reserve Bank of India (RBI) monetary policy meeting today. At 12:13 PM; Nifty Realty and Nifty Auto index, were trading 1.5% and 0.55% higher, respectively. While Nifty Bank, Nifty Private Bank and Nifty PSU Bank indices down in the range of 0.33% to 0.52%, as compared to a marginal 0.08% decline in the benchmark Nifty 50 index. HDFC Bank, YES Bank and Punjab National Bank were down an over 1%, while IDFC Bank, Federal Bank, Kotak Mahindra Bank, ICICI Bank and Bank of Baroda were trading higher by up to 1% on the National Stock Exchange (NSE). Ashok Leyland, Tata Motors, Eicher Motors, Apollo Tyres and Amara Raja Batteries from Nifty Auto index and Godrej Properties, Oberoi Realty, Sobha and DLF from the Nifty Realty index were up between 1% and 3%. Thus far in February, Nifty Realty (down 9%), Nifty PSU Bank (6.6%) and Nifty Bank (5.7%) had underperformed the Nifty 50 index, which down 4.8% till Tuesday. Nifty Auto index was down 3.7% during the period. The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, is likely to maintain status quo on interest rates with the tone turning slightly hawkish given the conditions relating to future inflation. CARE Ratings expect status quo in rate stance with a slightly hawkish view on inflation.
Liquidity appears neutral for the rest of the financial year and while GSec yields are high on account of various reasons, the direction of movement will be guided by the tone of the RBI language as inflation will be in the vicinity of 5% for the next few months driven largely by base effects and global crude price. The bank recap programme announced earlier by the government would find mention in the policy as it does clear the way for putting PSBs on a stronger footing. The tone on the progress made on NPAs would also be important as it will give an idea on whether or not this level has peaked or whether we have to wait for one more quarter. At the macro level crude oil prices, action by other central banks and global economic prospects would also be an integral part of the discussion, it added.