RBI MPC Meeting: Rate-sensitive sectors and stocks turn green as central bank surprises Street with pause in rate hike

RBI MPC Meeting: Most rate-sensitive sectors and stocks turned green after the Reserve Bank of India’s Governor Shaktikanta Das on Thursday, April 6, 2023, surprised the Street by announcing that the monetary policy has decided to keep the key interest rates ‘unchanged’.

The Reserve Bank of India on Thursday hit the pause button and decided to keep the key benchmark policy rate at 6.5 per cent even as inflation is trending above its tolerance level. The rate hike has been paused after six consecutive rate increases aggregating to 250 basis points since May 2022.

Sectors such as Nifty Bank and Nifty Financial Services gained nearly 0.5 per cent, while Nifty PSU Bank jumped nearly 1.5 per cent minutes after the RBI Governor announced the keep the rates unchanged in its April policy decision.

Similarly, other rate-sensitive sectors such as Nifty Realty surged almost 1 per cent and Nifty Auto grew marginally immediately after the RBI policy. On the contrary, Nifty Consumer Durables recovered from its lows to trade around 0.3 per cent lower after the monetary policy verdict.

With respect to rate-sensitive stocks, State Bank of India – India’s largest lender – gained over 1.5 per cent and was also trading as a top Nifty50 and Sensex gainer after the RBI’s policy decision.

Barring Axis Bank and Federal Bank, all other stocks in the Nifty Bank basket were in the green. Stocks such as PNB, and Bank of Baroda were each up 1 per cent, followed by IDFC First Bank, IndusInd Bank and Bandhan Bank each up between 0.5-1 per cent intraday today after RBI surprised the Street.

As many as 13 of 20 stocks of Nifty Financial Services were positive, minutes after the RBI announced its policy decision. Chola Finance was up by 5 per cent, followed by IEX up 4 per cent and other financial counters like Bajaj twins, and Shriram Finance were up between 1-2 per cent intraday. 

RBI MPC has taken a pause and kept the repo rates unchanged, against the majority market view, Sandeep Bagla - CEO, Trust Mutual Funds. He added that the stance remains unchanged at the enigmatic ‘withdrawal of accommodation’.

Bagla expects both GDP (Gross Domestic Product) and inflation to be significantly below RBI's year-end estimate of 6.5 per cent and 5.2 per cent, respectively. Interest rates are likely to soften considerably from current levels, the analyst also noted.

The Indian markets have also reacted in positive manner to the RBI’s policy decision as the benchmark indices – Sensex and Nifty50 – also turned green, up by 0.2 per cent – mainly aided by the rate-sensitive stocks and sectors.

Catch the latest updates on the first RBI policy review of the new financial year.

Catch the latest stock market updates here. For all other news related to business, politics, tech, sports and auto, visit Zeebiz.com.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)