Shares of interest-rate sensitive sectors are in limelight in otherwise subdued market ahead of the Reserve Bank of India (RBI) policy review on Tuesday.
Auto, realty and banking share index Bankex are trading higher between 0.23% and 1% on the Bombay Stock Exchange compared to 0.22% fall in benchmark Sensex at 1206 hours.
Among the individual stocks Anant Raj Industries, Parsvanath Developers and Oberoi Realty from real estate, Maruti Suzuki, Bajaj Auto and Mahindra and Mahindra from automobiles and Union Bank of India, ICICI Bank and SBI are up 1-3% on the BSE.
BofA Merrill Lynch expects the RBI to cut CRR or cash reserve ratio 25 bps on December 18 to pull down lending rates to support growth.
CRR — the proportion of total deposits a bank has to keep with RBI as cash — is at 4.25% of banks’ net demand and time liabilities (NDTL) currently. At the start of 2012, it had stood at 6% and it was brought down to the current level in four tranches.
The research firm expect the RBI to resume cutting rates only from January – 75 bps till July - once inflation peaks off to 7% levels in the March quarter. India is the only BRIC (Brazil, Russia, India and China) where lending rates are almost at their 2008 peak.