Shares of interest rate sensitive sectors such as banking, automobiles and real estate are trading lower after the Reserve Bank of India (RBI) kept the repo rate unchanged.
“The repo rate - at which the central bank lends to the banks - would remain unchanged at 8%,” the central Bank said in its half-yearly monetary policy review today. The Central bank has held the policy rate or the repo rate at 8% since April 2012.
However, the RBI lowered the Cash Reserve Ratio (CRR) - the portion of deposits that banks are required to keep with RBI – by 25 percentage points to 4.25% effective the fortnight beginning November 3, 2012. The RBI also increased the amount of provisioning against restructured loans to 2.75% from 2%, effective immediately.
As result of this reduction in the CRR, around Rs 17,500 crore of primary liquidity will be injected into the banking system, RBI said.
Meanwhile, the central bank has revised its inflation expectations upwards to 7.5% for FY13. The FY13 growth forecast has been cut to 5.8%.
Among the individual stocks, Tata Motors and Hero MotoCorp from automobiles, Canara Bank and Bank of Baroda from banking, Unitech and Indiabulls Real Estate from realty are trading lower by 2% each on the Bombay Stock Exchange.