Rate sensitive stocks slip as RBI cuts repo rate by 25 bps to 6%

PSU Bank and Private Bank index trading flat, while Auto and Realty index down marginally at 2:37 pm

Shares of rate sensitive sectors such as financials, automobiles and real estate were trading lower after the Reserve Bank of India (RBI) cut the repo rate and reverse repo rate by 25 bps at 6% and 5.75%, respectively, at Wednesday's third Bi-monthly monetary policy, keeping in line with what analysts and experts had forecast.

At 2:55 PM; Nifty PSU Bank and Nifty Private Bank index trading lower by 0.3% each, while Nifty Auto, Nifty and Nifty Realty indices fell 0.4% each on the National Stock Exchange (NSE), as compared to 0.4% decline in the Nifty 50 index.

Only Punjab Nation Bank and Axis Bank were trading in green while IDFC Bank, IndusInd Bank, Canara Bank, HDFC Bank, Federal Bank, State Bank of India (SBI), and Bank of Baroda were quoting in red on NSE.

Tata Motors, Ashok Leyland, Mahindra & Mahindra (M&M) and Bajaj Auto from automobiles and Unitech, Oberoi Realty, Godrej Properties and Sobha from real estate were down in the range of 1% to 4%.

“On the state of the economy, the Monetary Policy Committee (MPC) is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all. This hinges on speedier clearance of projects by the States. On their part, the Government and the Reserve Bank are working in close coordination to resolve large stressed corporate borrowers and recapitalize public sector banks within the fiscal deficit target. These efforts should help restart credit flows to the productive sectors as demand revives,” RBI said in a statement. CLICK HERE TO READ FULL POLICY STATEMENT.