Rate sensitive shares trade mixed after RBI keeps repo rate unchanged

At 11:38 am, the Nifty Bank, PSU Bank and Realty indices were trading in the red, while the Nifty Private Bank and Auto indices were trading marginally higher by up to 0.35 per cent on the NSE

Shares of rate sensitive sectors like real estate, automobiles and financials were trading mixed after the Reserve Bank of India's (RBI) monetary policy committee (MPC) kept the key interest rates unchanged for a seventh straight time on Friday, while retaining an accommodative stance to help revive the economy amid coronavirus-related stress.

The repo rate and reverse repo rate would remain unchanged at 4 per cent and 3.35 per cent, respectively, said RBI Governor Shaktikanta Das in a statement, after a three-day meeting of the committee in Mumbai. The central bank kept its FY22 GDP forecast at 9.5 per cent and revised retail inflation projection for the same period to 5.7 per cent from 5.1 per cent earlier. CLICK HERE FOR MORE

At 11:38 am, the Nifty Bank, PSU Bank and Realty indices were trading in the red, while the Nifty Private Bank and Auto indices were trading marginally higher by up to 0.35 per cent on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was down 0.26 per cent at 16,251.60 points.

Individually, State Bank of India (SBI), Bandhan Bank, DLF, Oberoi Realty and Godrej Properties were down between 1 per cent and 2 per cent while IndusInd Bank, AU Small Finance Bank, Maruti Suzuki India, Amara Raja Batteries, TVS Motor Company, Prestige Estates Projects, Indiabulls Real Estate were up in the range of 1 per cent to 3 per cent.

"RBI’s decision to maintain the status quo, keeping the repo rates unchanged at 4 per cent, indicates a continuation of its accommodative stance. Although, more efforts are needed to restore the supply-demand balance in the Real estate and infra sectors but continuation of lowest lending rates will ensure that businesses get more window to cope with the pandemic related challenges. The decision comes at the peak of high inflation and slow growth with a concerning pandemic around the globe. The yield curve and liquidity management were the central focus of the committee," said Rohit Poddar, Managing Director at Poddar Housing and Development.

Nitin Shanbagh, Head – Investment Products, Motilal Oswal Private Wealth, on the other hand, said RBI continues to prioritize growth and maintain financial stability as far as necessary. Having said that, it remains mindful of anchoring inflation expectations. While maintaining a balance between growth/inflation dynamics, RBI is likely to continue with orderly evolution of the yield curve through OMOs & GSAPs. Till durable growth recovery is seen, RBI may not resort to reversal of policy rates and would maintain sufficient liquidity in the system. However, RBI may gradually signal towards normalization of rates.