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This article is more than 1 year old.

RBI Monetary Policy: Rate sensitive stocks trade in red as MPC keeps repo rate unchanged; PSU banks fall

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Shares of rate-sensitive sectors such as banking, automobiles and real estate were trading in red on Thursday after the Reserve Bank of India (RBI) kept the repo rate unchanged at 5.15 percent. It also maintained the reverse repo rate at 4.9 percent.

RBI Monetary Policy: Rate sensitive stocks trade in red as MPC keeps repo rate unchanged; PSU banks fall
Shares of rate-sensitive sectors such as banking, automobiles and real estate were trading in red on Thursday after the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.15 percent. The street was expecting a minimum of 25 bps rate cut.
Repo rate is the rate at which the central bank lends money to the commercial banks, in case of any shortfall in funds. Also, the central bank maintained its 'accommodative' policy stance.
At 11:55 am, the Nifty PSU Bank index fell the most, down 1.5 percent followed by Nifty Bank, Nifty Fin Services, and Nifty Private Bank indices, which fell 0.5 percent. Nifty Auto and Nifty Realty also declined 0.5 percent and 0.3 percent, respectively.
In the PSU Bank index, all constituents, except Syndicate Bank, were trading in red in the noon deals. Canara Bank, Union Bank of India, Indian Bank, SBI, Oriental Bank of Commerce, and J&K Bank lost over 1.5 percent each. Other banking losers like IDFC First Bank, Yes Bank, Federal Bank also declined over 1.5 percent each.
Among auto stocks, Motherson Sumi, Tata Motors, Ashok Leyland, Bharat Forge, and Bosch fell between 0.5-2 percent. Meanwhile, Phoenix, Brigade Enterprises, Sunteck Realty, and DLF were the top losers in the realty sector.
The RBI slashed the GDP growth projection for the financial year 2019-20 to 5 percent from the earlier forecast of 6.1 percent. However, it raised its CPI forecast for the second half of FY20 to 5.1-4.7 percent from 3.5-3.7 percent.
The MPC notes economic activity has weakened further, the output gap remains negative. It added that the data on corporate finance, projects sanctioned suggest early signs of recovery in investment activity. Sustainability of early investment activity needs to be watched closely and addressing impediments that are holding back investments is needed, the MPC further noted.
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