Banks, auto and realty stocks cheer RBI's 25 bps rate cut

NEW DELHI: Shares of interest rate-sensitive stocks from banking, automobile and real estate sectors registered moderate gains on Tuesday, as the Reserve Bank of India in its fourth bi-monthly policy review cut the short-term lending rate by 25 basis points.

The BSE Realty index rose 0.96 per cent, the BSE Bankex gained 0.42 per cent, while the BSE Auto index edged 0.05 per cent higher for the day.

Among the lenders, SBI and PNB gained 1.6 per cent each. Shares of Federal Bank, Yes Bank and ICICI Bank advanced 1.07 per cent, 0.97 per cent and 0.84 per cent, respectively. IndusInd Bank and Axis Bank, meanwhile, ended up to 0.75 per cent lower.

Among realty stocks, NBFC, Oberoi Realty rose 7.33 per cent and 3.84 per cent, respectively. Tata Motors with a 1.6 per cent rise remained the only auto stock to end with healthy gains. Maruti Suzuki inched 0.03 per cent lower to Rs 5,769. Two-wheeler makers Bajaj Auto and Hero MotoCorp gained up to 0.63 per cent.

Ajay Bodke, CEO and Chief Portfolio Manager for PMS at Prabhudas Lilladher, said he expects the policy rate to come down by at least 50 basis points over the next six months.

Radhika Rao, India Economist at DBS, said given that India would see FCNR redemptions in October-November, the forthcoming US election and a possible Fed rate hike in December, on Tuesday was the best chance for RBI to move on policy rate.