Rate-sensitive sectors such as banking, finance, auto, and real estate witnessed strong buying momentum on Friday, in sync with the broader market, after the Reserve Bank of India (RBI) maintained status quo for the eighth time in a row. In line with market expectations, the central bank kept repo rates unchanged at 6.5% and raised its GDP growth forecast for FY25 to 7.2%, propelling Sensex over nearly 1,700 points while the Nifty gained 460 points. The market capitalisation of all listed companies on BSE rose by more than ₹5 lakh crore to ₹421 lakh crore.
The BSE Sensex surged 1,694 points, or 2.2%, to 76,769 levels, and the Nifty50 jumped 460 points, or 2%, to 23,298 mark. On the sectoral front, all indices were trading in positive terrain, led by information technology space, with BSE IT and BSE TECk indices rising up to 3%.
Among rate-sensitive sectors, the financial services was the top performer, with IIFL Securities, Bajaj Finance, Bajaj Finserv, JIo Financial, Paytm, Aditya Birla Cap, LIC Housing Finance shares rising up to 20%.
The banking sector also saw a similar trend, with sectoral leaders State Bank of India, HDFC Bank, Axis Bank, Bank of Baroda, ICICI Bank trading higher with modest gains.
Similarly, shares of realty indices rallied up to 8%, led by Sunteck Realty and Brigade. Barring, Oberoi Realty and Prestige all realty indices were trading in green zone, with Mahindra Lifespace, Lodha, DLF, and Godrej Properties gaining in the range of 2-4%.
In the auto space, except Bosch, all stocks were trading in positive terrain, with heavyweights M&M and Tata Motors rising up to 6%. Among others, Apollo Tyre, Maruti, Balkrishna Industries, MRF, Ashok Leyland, TVS Motor, Bajaj Auto, Hero MotoCorp, and Eicher Motor were up in the range of 0.5-2%.
According to market experts, RBI’s policy announcement was in line with expectations.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, says, “With the economic outlook revised upwards, we anticipate the RBI will focus on controlling inflation, aiming to bring it under the 4% target.”
He opines that above-normal monsoon may help control food prices and bring the food inflation under control. “This would prompt the RBI to perhaps lower interest rates towards the end of CY 2024 thereby further fuelling growth especially in the real estate sector, particularly benefitting the affordable housing segment.”
Marzban Irani, CIO of Fixed Income at LIC Mutual Fund, says that liquidity will be actively managed at both the ends, neither tight nor loose. Irani expects 10-year G-Sec yields to be range bound between 6.95 to 7.10.
Ravi Singh, SVP - Retail Research, Religare Broking, says that the increase in the GDP projection for the FY25 by RBI from 7% to 7.2% shows the commitment towards the balanced growth with control over inflation. “The IMD's forecast of an above-normal southwest monsoon is expected to enhance Kharif production, potentially improving the inflation-growth balance.”
Manish Kothari, President & Head – Commercial Banking, Kotak Mahindra Bank, says that a normal monsoon and lower global commodity price uncertainty may turn out to be the key lever for RBI making a shift in their stance towards a rate cut. “There is definitely, for now, a reason to maintain, "Poise, Patience & Perseverance" as the Governor concluded!”
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