Rate sensitives shrug off RBI move; key rates remain unchanged

Shares of rate sensitive sectors such as real estate, capital goods , auto and banking which were trading in the negative territory in the early deals have remained almost unchnaged barring select banking and auto shares post the announcement of RBI monetary policy.

The Reserve Bank of India (RBI) kept the key rates unchanged. The repo rate was unchanged at 7.75% and the reverse repo rate at 6.75%. However, RBI has cut SLR by 50 basis points to 21.5%, effective February 7. he repo rate 25bp to 7.50% from 7.25%.

ICICI Bank, SBI, Bank of Baroda, IndusInd Bank, Bank of India, Canara Bank and Yes Bank from banking sector, Godrej Properties, Omaxe and Oberoi Realty from real estate are trading higher upto 2% on the BSE.

Further, Tata Motors, Exide Industries, Bharat Forge and Motherson Sumi from the Auto segment are trading higher up to 4% on the BSE.

On January 16, 2015, RBI governor Raghuram Rajan announced his first rate cut since being appointed RBI governor in August 2013. The move prompted a near-unanimous opinion that this could be the beginning of a new interest rate easing cycle.

“Given that there have been no substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it is appropriate for the Reserve Bank to await them and maintain the current interest rate stance,” Rajan said in a statement.

The out-of-policy rate cuts last month were triggered by falling inflation rates and an unforeseen fall in oil prices to their lowest levels in years, and were seen as the beginning of an easing interest rate regime. However, further rate cuts were expected to be staggered over the year rather than in quick succession.

ICICI Bank

Bank Of Baroda

State Bank of India