Shares of interest rate sensitive sectors such as financials including banks, housing finance companies (HFCs), real estate and automobiles were trading higher by up to 4 per cent on the National Stock Exchange (NSE) after the Reserve Bank of India (RBI) kept interest rates unchanged for the ninth consecutive time on Wednesday.
The policy repo rate remains unchanged at 4 per cent and the stance remains accommodative. The reverse repo rate also remains unchanged at 3.35 per cent.
At 10:55 am; Nifty Bank, Nifty Financial Services, Nifty PSU Bank, Nifty Private Bank, Nifty Auto and Nifty Realty indices were up between 1 per cent and 2 per cent. In comparison, the Nifty50 index was up 1.3 per cent at 17,400 points.
"The announcements are on expected lines. We expect some recovery in the broader markets going ahead. Bank Nifty has also gained traction over the past two sessions and is holding the support of its long-term 200-day average at 35,700 levels. There could be more upside in the index as the RBI policy is favorable," said Vikas Jain Senior Research Analyst at Reliance Securities.
Among individual stocks, Bajaj Finance, Mahindra & Mahindra Financial Services, ICICI Bank and State Bank of India (SBI) from the financials, Sobha, Sunteck Realty, Oberoi Realty and Godrej Properties from realty were up in the range of 2 per cent to 4 per cent on the NSE.
The Reserve Bank of India's (RBI's) six-member monetary policy committee (MPC), headed by Governor Shaktikanta Das, decided to maintain key interest rates for a ninth straight meeting, retaining an accommodative stance amid the threat surrounding Omicron coronavirus variant. READ ABOUT IT HERE
“The MPC has judged that the ongoing domestic recovery needs sustained policy support to make it more broad-based. Considering it appropriate to wait for growth signals to become solidly entrenched while remaining watchful on inflation dynamics, the MPC decided to keep the policy repo rate unchanged at 4 per cent and to continue with an accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward,” RBI said in Monetary Policy Statement, 2021-22.
"It is a welcome move to keep key interest rates unchanged, reiterating an accommodative stance on both rates and liquidity. Food inflation is still a matter of concern, even as fuel inflation has risen, and CPI inflation and fuel inflation, has remained elevated. Continued policy support is a good stance for growth. The Indian economy has recovered from its greatest slump; we are now better prepared to deal with the upcoming Omicron variant," said D.R.E Reddy, CEO and Managing Partner, CRCL LLP on the RBI Monetary Policy.