Banks, realty, capital goods stocks rally upto 8% after RBI's surprise rate cut

NEW DELHI: Rate sensitive stocks such as banks, autos, realty and capital goods stocks surged higher in trade on Wednesday, after the Reserve Bank of India (RBI) slashed repo rate by 25 bps to 7.5 per cent from 7.75 per cent earlier.

RBI lowered its policy repo rate by 25 basis, its second inter-meeting cut this year on the back of easing inflation. The guidance on policy action given in the fifth-bi-monthly monetary policy statement of December 2014 is largely unchanged.

"Further monetary actions will be conditioned by incoming data, especially on the easing of supply constraints, improved availability of key inputs such as power, land, minerals and infrastructure, continuing progress on high-quality fiscal consolidation, the pass through of past rate cuts into lending rates, the monsoon outturn and developments in the international environment," said the central bank note.

Indian bonds, rupee, shares gained sharply after a surprise rate cut by the central bank.

India's 10-year benchmark bond yield fell to 7.64 per cent, the lowest since February 2, compared with its Tuesday's close of 7.75 per cent and the rupee rose to 61.7650/7750 to the dollar versus previous close of 61.9150/9250, Reuters reported. The rupee rose as much as 61.65, its strongest since February 4.

The BSE Banking index was trading 1.2 per cent higher, led by gains in Bank of Baroda (up 2.6%),ICICI Bank (up 2.4%), Punjab National Bank (up 2.2%), Canara Bank (up 2%) and State IndusInd Bank (up 0.9%).

BSE Realty index was trading higher by over 2 per cent, led by gains in NBCC (up 8.2%), Indiabulls Real Estate (up 3.2%), DLF (up 2.7%), Unitech (up 2.5%), and HDIL (up 2.2%).

BSE Auto index was trading nearly 1 per cent higher, led by gains in Tata Motors (up 2.1%), Hero MotoCorp (up 0.8%) and M&M (up 0.6%).

BSE Capital Goods index was trading 0.3 per cent higher, led by gains in Alstom T&D (up 5%), BEML (up 4.5%), Sadbhav Engg (up 3.64%), FAG Bearings Ltd (up 3.7%) and Pipavav Defence (up 3%).