Rate sensitive shares trade firm as RBI keeps repo rate unchanged; PSBs dip

RBI Policy Impact: At 10:34 AM; Nifty Auto, Nifty Realty, Nifty Financial Services and Nifty Bank indices were up nearly 1 per cent, as compared to 0.3 per cent rise in the Nifty 50.

Interest rate sensitive stocks post RBI Policy annoucement

Shares of rate sensitive sectors like banks, automobiles and real estate were trading firm after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the benchmark repo rate unchanged at 5.5 per cent.

 

At 10:34 AM; Nifty Auto, Nifty Realty, Nifty Financial Services and Nifty Bank indices were up nearly 1 per cent each, as compared to 0.3 per cent rise in the Nifty 50. The Nifty PSU Bank index, however, was down 0.55 per cent on profit booking. 

 

Tata Motors and Mahindra & Mahindra (M&M) from automobiles, REC, Power Finance Corporation, ICICI Bank, Kotak Mahindra Bank and Shriram Finance from financials, and Godrej Properties from the realty index were up in the range of 2 per cent and 3 per cent.

 

Make smarter market moves with The Smart Investor. Daily insights on buzzing stocks and actionable information to guide your investment decisions delivered to your inbox.

Subscribe

 

However, SBI Cards and Payment Services, Bajaj Finance, Bajaj Finserv, State Bank of India (SBI), Indian Bank, Canara Bank, Bank of Baroda and Punjab National Bank were down up to 2 per cent.  READ STOCK MARKET LIVE UPDATES TODAY 

The RBI’s MPC in the policy statement said that after a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.50 per cent; consequently, the standing deposit facility (SDF) rate remains at 5.25 per cent while the marginal standing facility (MSF) rate and the Bank Rate remains at 5.75 per cent. The MPC also decided to continue with the neutral stance. 

Meanwhile, the growth outlook remains resilient supported by domestic drivers, despite weak external demand. It is likely to get further support from a favourable monsoon, lower inflation, monetary easing and the salubrious impact of recent GST reforms. 

 

However, growth continues to be below our aspirations. Even though the growth projection for the financial year 2025-26 is being revised upwards, the forward-looking projections for Q3 and beyond are expected to be slightly lower than projected earlier, primarily due to tariff-related developments, despite being partially offset by the impetus provided by the rationalisation of GST rates, MPC said in the statement.

 

By keeping the repo rate steady, the RBI is signaling a “wait and watch” or neutral stance rather than an aggressive easing or tightening, said Jigar Trivedi, Senior Research Analyst at Reliance Securities.

 

The MPC today delivered a dovish pause in policy rates, acknowledging fast changing growth-inflation dynamics. Average Inflation for FY26 was revised lower to 2.6 per cent from an already low level of 3.1 per cent. While full year GDP has been revised up by 30 bps, the forward-looking projections for Q3 and beyond are expected to be slightly lower than projected earlier.   ALSO READ | Should you avoid rate-sensitives stocks as RBI MPC holds policy rates? 

“This, according to the MPC, has opened up some space for monetary easing, as they await the impact of their past actions to play out. We expect this rhetoric to be perceived as relatively dovish compared to the MPC’s earlier messaging, thereby capping any rise in Government Bond Yields. Market will keenly track incoming economic data to evaluate the future trajectory of policy rates. We assign high probability to one more rate cut in this easing cycle going forward,” said Churchil Bhatt, Executive Vice President – Investment, Kotak Mahindra Life Insurance Company Ltd.

 

While there was no strong case for an immediate rate cut, the more important focus was on how the RBI would support credit delivery and improve the ease of doing business, particularly through adjustments to risk weights and regulatory frameworks. 

 

In that context, the RBI has announced a series of thoughtful and forward-looking measures. Expanding bank financing to include M&A activity, increasing limits on capital market exposures, and rationalising the large exposure framework are all constructive steps toward more efficient capital allocation. The reduction of risk weights for infrastructure lending by NBFCs is a clear positive, potentially lowering the cost of capital for critical sectors, said Sachin Sawrikar, Managing Partner of The Artha Global Opportunities fund.