Shares of rate sensitive sectors such as banks, auto and realty have moved higher after the Reserve Bank of India (RBI) has cut the repo rate and cash reserve ratio (CRR) by 25 basis points (bps) each.
State Bank of India, ICICI Bank and Kotak Mahindra Bank from banking, Sobha Developers, Oberoi Realty and HDIL from realty and Ashok Leyland, Maruti Suzuki India and Hero MotoCorp are trading higher by 1-3% on the Bombay Stock Exchange
The central bank said that it has reduce the policy repo rate, the rate at which RBI lends money to scheduled banks, under the liquidity adjustment facility (LAF) by 25 basis points from 8% to 7.75% with immediate effect.
RBI has also decided to reduce the CRR of scheduled banks by 25 basis points from 4.25% to 4% of their net demand and time liabilities (NDTL) effective the fortnight beginning February 9, 2013.