Rate sensitive sector stocks such as banking, automobiles and constructions have rallied in opening trades ahead of the Reserve Bank of India (RBI) mid-quarter review of monetary policy on today at 11 AM.
Market participants expect the central bank to cut its key lending rate by 25 bps to boost economic growth. India’s gross domestic product growth rate slowed to a nine-year low of 5.3% in the March quarter.
“Interest rates and CRR (cash reserve ratio, or the portion of cash banks are required to keep with RBI) are largely expected to be lowered. A higher-than-expected cut in interest rates / CRR will take the markets higher, though the gains may be short-lived in the backdrop of lack of policy initiatives,” said Dipen Shah, Head of Fundamental Research, Kotak Securities:
Among the individual stocks, GMR Infra, HDIL and Lanco Infra from the constructions, State Bank of India (SBI), ICICI Bank and Punjab National Bank from banking and Tata Motors and Hero MotoCorp from automobiles are trading higher by 2-4% on the Bombay Stock Exchange.
