RBI rate hike may see rate sensitive stocks bottom out. Time to buy?

Shares of banks and NBFCs seem to be better placed on the charts, while that of automobile, realty and others need to sustain above the crucial levels.

The RBI Governor Shaktikant Das today raised the repo rate by 50 basis points (bps), on expected lines, as concerns over soaring inflation and rupee depreciation remain elevated. Earlier, in an off-cycle policy decision the Central Banker had raised repo rate by 40 bps in May 2022.


 

Even though the markets expected a 50 bps rate hike, traders were wary over the possibility of a steeper rate hike coupled with hike in CRR rate. Owing to which, the rate sensitive shares such as banks, NBFC and other related sectros were under pressure in the run-up to the policy meet.
 

So far, the Nifty Bank has tanked 15 per cent from its all-time high registered in November 2021. Whereas, select stocks from the NBFCs had plummeted in the range of 30 to 50 per cent, while infra and construction related shares anked around 25 per cent from their respective highs.

However, today post the announcement of repo rate hike - State Bank of India (SBI), Bank of Baroda and IndusInd Bank rebounded into the positive zone to trade with gains in excess of 1 per cent each. Among NBFC’s, Manappuram Finance and Bajaj Finserv too witnessed sharp recoveries. 

Other interest rate sensitive stocks like Hero MotoCorp, DLF and Larsen & Toubro also started trading with gains as even benchmark indices, BSE Sensex and Nifty 50.


 

Given today's rebound, will this repo rate hike provide short-term relief to related sensitive stocks or will it unfold more pain ahead? To find out these answers, let’s consider the technical outlook on select stocks:-

State Bank of India (SBIN) 

Likely target: Rs 515 (after sustaining over 200-DMA) 

Upside potential: 9%

The stock currently trades under the 200-day moving average (DMA) positioned at Rs 475. If the stock manages to conquer this respective hurdle, the breakout could see a rally to Rs 515, which is the next imminent resistance, shows the daily chart. Further, select momentum oscillator like the Relative Strength Index (RSI) seeks to support the positive bias as long as it trades over 40 value. The immediate closing basis support for the stock falls at Rs 460. CLICK HERE FOR THE CHART

Manappuram Finance Limited (MANAPPURAM)

Likely target: Rs 105

Upside potential: 11%

The shares of Manappuram Finance have shed 50 per cent of gains from the historic peak of Rs 202.80 marked in November last year. Such a downfall has subsequent obstacles on every up move, supports have become resistances now, as per the daily chart. Nevertheless, the RSI has managed to ascend over the oversold territory and if the stock upholds the RSI over 40 value, the strength could see a short bounce towards Rs 105. The immediate support comes at Rs 90 mark. CLICK HERE FOR THE CHART

DLF Ltd (DLF) 

Outlook: Could see consolidation breakout offering 15 per cent gains.

The stock continues to witness accumulation in the range of Rs 320 to Rs 300, according to the daily chart. The current price action is showing sideways movement and could see consolidation, which probably might turn into a positive breakout. If this happens, the stock is anticipated to rally in the direction of Rs 380 to Rs 400, offering  nearly 15 per cent gains. CLICK HERE FOR THE CHART

Hero MotoCorp Ltd (HEROMOTOCO) 

Outllook: Needs to conquer Rs 3,000

While this stock become one of the favorites of market participants as it recovered all the recent losses and presumed to rally towards a new historic peak, the stock however needs to scale the significant resistance of Rs 3,000 mark, shows the daily chart. Nonetheless, the stock continues to linger around 200-DMA post March 2021, exhibiting revival hopes. CLICK HERE FOR THE CHART

Larsen & Toubro Ltd (LT)

Outlook: Death cross points at weakness

Post the formation of “Death Cross” , which led to a further weakness towards Rs 1,500, the stock price action reversed to show a possible rebound in trend. However, the Larsen & Turbo stock failed to cross Rs 1,680 level, its 50-DMA hurdle. The overall trend is weak and negative, as signalled by the  death cross. The immediate support for the stock exists at Rs 1,500. CLICK HERE FOR THE CHART