Auto, capital goods stocks surge after RBI rate hike

NEW DELHI: Shares of banking, FMCG and realty stocks slipped in the red post the raising of key lending rates by the Reserve Bank of India, while shares of auto, capital goods and power stock gained over 1%.

At 12:38 p.m., the BSE Sensex was trading 1% higher at 17,043.43, while the 50-share Nifty index up .8% at 5,116.55.

The BSE Mid-cap index was trading higher by 0.4% and BSE Small-cap index had gained 0.1%.

BSE Auto index soared 1.4% in the afternoon trade led by gains in Tata Motors Ltd, which was up 6.6%. Maruti Suzuki Ltd rose 1.5% and Mahindra & Mahindra was up by 0.6%.

“We expect the interest rates cycle reversing from the beginning of next year. Hence it’s a good time to start buying rate-sensitive stocks from banking and auto sectors. It’s a matter of time for them to bounce back,” said Vivek Goel, Head-Equity PMS, Karvy Private Wealth.

“A lot of value can be seen in private sector banks. Two-wheelers and tractors look good from auto space,” added Goel.

“The current policy stand by the RBI is on expected lines and the current intraday volatility in the market should settle down eventually,” said Chaitra Bhat, Research Analyst at LKP securities Ltd.

“Going forward, the RBI policy will be influenced by inflation trajectory. The impact on rate sensitives would continue to remain negative as credit growth comes under further pressure,” added Chaitra

At 12:20 p.m., the BSE Banking index slipped 0.07%, led by losses in Kotak Mahindra Bank, which was down 1%. IDBI Bank slipped 1.01% and Federal Bank was down 0.6%.

“The banks are likely to raise rates over the next 1-2 quarters,” said Chaitra.

BSE Capital Goods index up 1.2%, led by gains in Larsen & Toubro Ltd, which was up 2.2%. Crompton Greaves gained 0.9% and Areva T&D was up 2.1%.

BSE FMCG index pared early losses and was trading 0.05% higher and BSE Banking index was up 0.2%.