RBI MPC Policy: Banking, financial stocks gain on expected rate hike announcement, insurance stocks defy trend – SBI, BoB top gainers

With the Reserve Bank of India raising the key interest rate as expected, the rate-sensitive sectors, mainly banking and financials, gained immediately after the monetary policy announcement.  

Both Nifty Bank and Financial Service were trading nearly 1 per cent higher intraday on Wednesday as compared to a 0.1 per cent rise in the Nifty50 at around 11:17 AM. Similarly, BSE Bankex and BSE Finance each are up by 0.74 and 0.62 per cent respectively versus a 0.06 per cent rise in Sensex. 

The central bank raised the interest rate by 50 basis points to a two-year high of 4.9 per cent as it doubled down to tame inflation that has surged in the last couple of months. 

The rate hike comes on the back of a 40 bps increase effected by RBI at an unscheduled meeting on May 4. 

In the banking segment, public sector banks such as Bank of Baroda and SBI gained most by over 2.5 and 2 per cent intraday, respectively. While HDFC Bank along with other banks such as Federal Bank IDFC First Bank, Kotak Mahindra Bank, and PNB each gained nearly 1 per cent on rate hike news. 

Similarly, ICICI Bank, Axis Bank, Au SF Bank, and Bandhan Bank each up between 0.2-0.5 per cent intraday on Wednesday. 

In the financial services category, Cholamandalam Investment and Finance gained the most in the segment by 2.5 per cent, followed by REC Limited by over 2 per cent. While heavyweights such as Bajaj Finance, Bajaj Finserv, SBI Cards, and HDFC AMC each gained between 1-2 per cent intraday. 

Meanwhile, Insurance stocks such as HDFC Life, ICICI Pru Life, ICICI Lombard defied to shine on rate hikes like others. ICICI Lombard cracked over 3 per cent intraday, while the other two were down over 1 per cent intraday on Wednesday. 

All the six members of the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted for the latest rate hike.