Should you dump rate sensitive stocks post the RBI's surprise rate hike?

The RBI in its bid to tame inflation announced a 40 basis points (bps) hike in repo rate and 50 bps increase in Cash Reserve Ratio (CRR), in an unscheduled meeting on Wednesday. This came as a shocker for the markets, and the benchmark indices ended with heavy losses of over 1,300 points or 2.30 per cent for the BSE Sensex and 392 points or 2.29 per cent on the Nifty 50. 

Real estate and automobiles, which were showing signs of a nascent recovery, will bear the brunt of higher interest rates following the central bank’s rate hike because customers will delay buying new homes and cars. READ ABOUT IT HERE

To understand the current scenario and possible road ahead for rate sensitive sectors, let’s consider the technical charts for more clarity. 

NIFTYBANK

Outlook: Bullish rally above 200-DMA only

In the past six months, this is the third time Nifty Bank index trades under the 200-day moving average (DMA). Prior to this, the Nifty Bank index breached the said average in February, 2020. The 200-DMA is presently positioned at 36,923. The bullish trend is anticipated to restart only above the 200-DMA hurdle. The immediate support comes to 34,500 level, followed by 34,000 mark, shows the daily chart. As of now, the trend remains sluggish. CLICK HERE FOR THE CHART

NIFTY AUTO INDEX

Outlook: Safe until 10,600 is defended

The price action indicates a closing basis support at 10,600-level, which if defended aggressively the index might see either sideways or an upward rally, according to the daily chart. That’s said, the index needs to conquer the 11,300-level to enter a robust bullishness. Until then, the strength and momentum can shift to either side.  CLICK HERE FOR THE CHART

NIFTY REALTY INDEX

Outlook: Negative bias prevails under 200-DMA

After recovering from the massive decline of 30 per cent, the index did manage to overcome the obstacle of the 200-DMA in late March 2022. The rebound seemed decent, until it failed to add follow-up buying soon after crossing the 100-DMA. At present, the index is back under 200-DMA, placed at 462.60 and trades with a negative bias, shows the daily chart. This also coincides with the illustration of Moving Average Convergence Divergence (MACD), which signals a negative downside as it breached the zero line downward. The next support comes to Rs 411. CLICK HERE FOR THE CHART