Interest rate sensitive sectors such as automobiles, realty, capital goods and bank have rallied more than 2% each on hopes that the Reserve Bank of India (RBI) may cut interest rates in March, after inflation rate based on the wholesale price index (WPI) fell to 6.55% in January, 2012, the lowest level in over two years. It was 7.47% in December, 2011, and 9.47% in January, 2011.
The Bombay Stock Exchange (BSE), auto and realty indices have rallied 3% each, while the capital goods and the Bankex are trading 2% higher, as compared to 1.3% rise in the benchmark index Sensex at 1014 hours.
The RBI had raised interest rate 13 times since March, 2010 to tame inflation may cut the rates in its forthcoming monetary policy. The rising interest burden has dragged down the net profit growth of infra and realty sectors by more than one-fourth in nine months ended December. Lower interest rates will benefit the automobiles and realty sector.
Volume Shockers
Tata Motors has rallied 7% to Rs 287 after reporting 41% year-on-year jump in consolidated net profit at Rs 3,405 crore for the quarter ended December 2011 on the back of better performance by British division Jaguar Land Rover (JLR). As many as 15.53 million shares have already changed hands on the counter on so far, against an average sub 18 million shares that were traded daily in past two weeks on the NSE and BSE.
Among the other individual stocks, Maruti Suzuki, Mahindra and Mahindra and Ashok Leyland from automobiles; Unitech, DLF, HDIL and Parsvnath Developers from realty; and IDBI Bank, Axis Bank and YES Bank from the banking space have rallied more than 3% each on the back of huge volumes.