Interest rate sensitive stocks dip post RBI policy

Interest-rate sensitive realty, banking and auto stocks witnessed heavy selling pressure today, falling up to 8 per cent, after the RBI hinted that there may not be any more cuts in the near-term.

Among realty scrips, Prestige Estates Projects slumped 8.11 per cent, Indiabulls Real Estate dipped 6.53 per cent, Godrej Properties (5.08 per cent), DLF (4.31 per cent), Housing Development and Infrastructure Ltd (4.23 per cent) on the BSE.

The BSE realty index fell by 3.83 per cent to settle at 1,502.52.

Among bank stocks, Canara Bank declined by 4.66 per cent, SBI lost 4.28 per cent, Axis Bank was down 4.20 per cent, Bank of India (3.74 per cent), Yes Bank (3.72 per cent) and ICICI Bank (3.70 per cent).

Following losses in these scrips, the BSE bank index lost 3.46 per cent to 20,654.20.

Auto stocks too faced selling pressure, with Hero MotoCorp falling 3.76 per cent, Bajaj Auto (2.88 per cent), Mahindra & Mahindra (2.56 per cent), Maruti Suzuki (1.31 per cent) and Tata Motors (1.05 per cent).

The auto index slipped 2.08 per cent to 18,618.73.

"As expected anything less than 50 bps is not being welcomed by the market. RBI has highlighted risk from below normal monsoon, food inflation, increase in crude prices and external environment," said Vinod Nair, Head-Fundamental Research at Geojit BNP Paribas Financial Services.

Home, auto and corporate loans are likely to cost less after RBI today cut interest rate by 0.25 per cent for the third time this year to spur investment and growth but hinted there may not be any more cuts in the near-term sending stock markets into a tizzy.

RBI cut the repo rate (short-term lending rate) from 7.5 per cent to 7.25, but left all other policy tools like cash reserve requirement unchanged at 4 per cent and Statutory Liquidity Ratio (SLR) at 21.5 per cent.

In the broader market, the benchmark BSE Sensex fell sharply by 660.61 points to settle at 27,188.38.