Rate-sensitive stocks traded mixed on Wednesday after the Reserve Bank of India raised the repo rate by 25 basis points to 5.5 per cent. Banking shares gained up to 2 per cent, while automobile and realty stocks fell. The central bank also shifted its policy stance towards tighter monetary conditions today.
Banking stocks gained, while automobile and real estate shares came under pressure after the policy announcement.
Shares of interest-rate-sensitive sectors traded mixed in Wednesday's intraday session after the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) unanimously raised the repo rate by 25 basis points to 5.5 per cent from 5.25 per cent.
Banking and financial stocks emerged as relative outperformers, with the Nifty Bank, Nifty Private Bank, Nifty PSU Bank and Nifty Financial Services indices trading up to 1 per cent higher. The gains came even as the benchmark Nifty 50 fell 0.38 per cent.
Financial-sector indices had initially declined by up to 1 per cent earlier in the session amid weak global market cues, but recovered after the RBI policy announcement.
In contrast, automobile and real estate stocks came under pressure following the repo rate decision. The Nifty Auto index declined around 1 per cent, while the Nifty Realty index slipped 0.24 per cent during intraday trade.
Within the automobile segment, Bajaj Auto, Tube Investments of India, Bharat Forge, Hero MotoCorp and Mahindra & Mahindra were among the key laggards, with their shares falling between 1 per cent and 2 per cent.
The real estate pack also remained weak, with Brigade Enterprises, Prestige Estates Projects, Godrej Properties, DLF and Oberoi Realty trading around 1 per cent lower.
On the banking side, several lenders bucked the broader market weakness. Kotak Mahindra Bank, Union Bank of India, Canara Bank, Punjab National Bank, Federal Bank and ICICI Bank gained as much as 2 per cent during the session.
The RBI raised the benchmark repo rate by 25 basis points to 5.5 per cent, up from 5.25 per cent, as its MPC shifted its policy stance towards tighter monetary conditions.
The decision was taken unanimously at the MPC meeting held from October 5 to 7. Along with the rate hike, the central bank changed its policy stance from "neutral" to "calibrated tightening."