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Rate-sensitive Bank, Auto Stocks Fall as RBI Surprises with its Decision to Hold Key Policy Rates

The BSE Bank index closed at 36,147.31, down 0.76 per cent while the BSE auto index settled 0.64 per cent lower at 17,810.17.


Updated:December 5, 2019, 6:39 PM IST
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Rate-sensitive Bank, Auto Stocks Fall as RBI Surprises with its Decision to Hold Key Policy Rates
Representative image.

New Delhi: Rate-sensitive bank and auto stocks fell on Thursday while realty companies largely depicted a mixed trend after the Reserve Bank surprised with its decision to hold key policy rates.

Among bank stocks, IndusInd Bank fell 2.21 per cent, RBL Bank 1.95 per cent, SBI 1.65 per cent, Yes Bank 1.51 per cent, Axis Bank 1.39 per cent, Federal Bank 1.25 per cent, HDFC Bank 0.50 per cent, Kotak Mahindra Bank 0.46 per cent and ICICI Bank 0.27 per cent on the BSE.

The BSE Bank index closed at 36,147.31, down 0.76 per cent.

The Reserve Bank on Thursday unexpectedly hit a pause button on cutting interest rate as it gave more importance to prevailing inflation pressure and rising food prices over a worrying slowdown in the economy.

After five consecutive cuts in interest rates this year, the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted to hold the key repo rate at 5.15 per cent and reverse repo rate at 4.90 per cent.

Among auto companies, Tata Motors skidded 1.95 per cent, Hero MotoCorp 1.76 per cent, Ashok Leyland 1.42 per cent, Motherson Sumi Systems 1.17 per cent, Maruti Suzuki India 0.99 per cent, Bajaj Auto 0.71 per cent, M&M 0.37 per cent and TVS Motor Company 0.08 per cent.

Tracking weakness in these scrips, the BSE auto index settled 0.64 per cent lower at 17,810.17.

"RBI's decision to keep policy rates unchanged was a surprise, especially after indicating in the last policy that growth was a bigger concern and reducing the FY 2020 GDP growth estimate to 5 per cent," said Suvodeep Rakshit, Vice President & Sr Economist, Kotak Institutional Equities.

Realty index was mixed at the closing bell. Shares of Phoenix Mills fell 2.64 per cent, Sunteck Realty 1.70 per cent, Mahindra Lifespace Developers 1.59 per cent, Godrej Properties 0.19 per cent, Indiabulls Real Estate 0.16 per cent and Prestige Estates Projects 0.09 per cent.

In contrast, Oberoi Realty gained 2.75 per cent, Sobha 0.59 per cent, Omaxe 0.42 per cent and DLF 0.39 per cent.

The realty index closed at 2,198.50, up 0.20 per cent.

HDFC Securities MD & CEO Dhiraj Relli said, "Though the stock market participants could be disappointed by the no-repo-rate-cut action, we think that the participants are mature enough to understand the prudence of the Central Bank which means that the markets may not react downwards sharply due to this disappointment."

In the broader market, the 30-share BSE gauge Sensex was lower by 70.70 points or 0.17 per cent to close at 40,779.59.

"It was an unexpected move with the RBI keeping the repo rate unchanged at 5.15 per cent, as the market expected 25 bps (basis points) cut in repo rate," Deepthi Mary Mathew, Economist at Geojit Financial Services said.

"Given the growth-inflation dynamics, we still sense that RBI will deliver a rate cut of 25bps in February policy meeting given the widespread deceleration in the economy," Amar Ambani, Head of Research - Institutional Equities, YES Securities said.

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Company Price Change %Gain
SBI 313.65 -0.10
Bharti Airtel 511.35 0.41
HUL 2,056.95 -0.28
Vodafone Idea 5.92 21.81
Reliance 1,533.95 0.13
Top Gainers
Company Price Change %Gain
Kotak Mahindra 1,625.95 0.49
Bharti Airtel 511.35 0.41
HDFC 2,464.50 0.37
IndusInd Bank 1,336.80 0.36
ONGC 122.75 0.33
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Company Price Change %Gain
Tata Steel 475.90 -3.01
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Maruti Suzuki 7,303.10 -1.93

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