The rate sensitive sectors such as realty, banking and auto have extended gains post RBI policy and are up 2% each.
The Reserve Bank of India announced 25 basis points (bps) hikes in key policy rates today, which most marketmen feel was already factored in.
The hike in key policy rates as well as the CRR was at the lower-end of market expectations. Analysts were expecting a 25 to 50 basis points hike in short term rates and the CRR.
All top five gainers among the Sensex, such as SBI, DLF, ICICI Bank, Tata Motors and Mahindra & Mahindra are from the rate sensitive sectors. The BSE, Realty index is the largest gainer, appreciating 3%, Bankex and Auto indices follow - up 2% each.
Escorts, Ashok Leyland, Bank of India, IDBI Bank, Mahindra Lifespace and Indiabulls Real Estate are others non-index stocks from rate sensitive sectors appreciated more than 3% each, as compared to 1% rise in the Sensex.
Earlier, the RBI had on 19 March 2010 had raised the repo rate, the rate at which RBI lends to banks to 5% from 4.75% and reverse repo rate, the rate which RBI absorbs funds from the system was raised to 3.50% from 3.25%.
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(Updated at 1055 hrs)
Rate sensitive stocks have gained in early trades this morning, ahead of RBI's credit policy meet. In fact, the sector has outperformed the markets in the last one week despite fears of a certain rate hike.
The auto, realty and banking sectors have slipped around 1% each in the last one week, while the Sensex shed 2%.
However, when compared the last surprise repo and reverse repo rate hike on March 19, the realty and bankex sector have still outperformed, while auto sector has unperformed.
The Bombay Stock Exchange (BSE), real estate sector index Realty and banking shares index, Bankex has outperform the benchmark indices by gaining more than Sensex and S&P CNX Nifty since last credit policy announced by the Reserve Bank of India (RBI), on March 19, 2010.
The RBI had raised key policy rates citing intensifying inflationary pressures and a steady economic recovery. The repo rate, the rate at which RBI lends to banks was raised to 5% from 4.75% and reverse repo rate, the rate which RBI absorbs funds from the system was raised to 3.50% from 3.25% with immediate effect.
Realty index was the largest gainer; appreciated 4% and Bankex gained 1% till yesterday. On the other hands, the Auto index declined 2%, as compared to 1% each fall in the Sensex and S&P CNX Nifty in last one month.
It would be interesting to see how these sectors react once the credit policy is out. It is more or less certain that the RBI will hike interest rates to contain inflation and drain out excess liquidity from the banking system.
BSE bankex has gained 0.6% or 66 points to 10,584. Earlier in the day, the index jumped to a high of 10,594.
The auto index has surged 0.7% to 7,561. The realty index has erased early morning losses and is up 0.4% at 3,475.
Among auto stocks, Escorts has surged 3% to Rs 171. Bharat Forge has added 2% to Rs 278.
Amtek Auto, Ashok Leyland, Maruti Suzuki and Bosch have moved up around 1% each.
Banking stocks have also moved up. Allahabad Bank has rallied 2% to Rs 163. Indian Overseas Bank and Axis Bank have gained 1.5% each to Rs 94 and Rs 1174, respectively.
Federal Bank, Canara Bank and Punjab National Bank are the other gainers.
ICICI Bank has added 0.7% to Rs 927. SBI is up marginally at Rs 2,040.
Among realty stocks, Mahindra Lifespace Developers has jumped 3.6% to Rs 508. Other gainers include Peninsula Life, Parsvnath Developers and Phoenix Mills. DLF has advanced 0.7% to Rs 319.
