Rate sensitive shares in demand ahead of RBI policy meet

The NSE, CNX Auto, CNX Realty, CNX Infra and Bank Nifty are up 3-7% as compare to less than 3% rise in benchmark CNX Nifty at 1033 hours.

Shares of rate sensitive sectors such as automobiles, real estate, infrastructure and banking have rallied up to 17% on hopes that the Reserve Bank of India (RBI) may roll back its tightening measures taken in order to contain the forex volatility in its monetary policy review on tomorrow.

The National Stock Exchange (NSE), CNX Auto, CNX Realty, CNX Infra and Bank Nifty are up 3-7% as compare to less than 3% rise in benchmark index CNX Nifty at 1033 hours.

YES Bank, ICCI Bank and Axis Bank from banking, DLF, HDIL and Unitech from realty, Maruti Suzuki and Mahindra and Mahindra from automobiles are among few trading higher by over 4% each.

Recent announcement by RBI to prevent Rupee fall and higher financial market supported both the markets and INR gained nearly 8-10% against dollar from its recent low of 68.80 and now Rupee is trading near to 61.94 far away from an all time low.

Increasing rupee could help to control inflation, reduce import bill, current account deficit and may support in economic growth.

However, the recent high WPI readings are unlikely to provide the RBI comfort on the inflation front so we believe that it is likely to maintain status quo on the repo rate and CRR, said analyst at Angel Broking in a note.

There is a higher probability that the RBI provides operational flexibility to banks with regard to easing the restrictions imposed on CRR in the upcoming policy, he added.