Rate-sensitive stocks trade in red even as RBI keeps rate at 7-year low

Rate-sensitive banking, auto and real estate stocks were trading in red despite the Reserve Bank of India (RBI) keeping interest rate unchanged at 6 per cent.

Nifty Realty, auto and bank index were down 0.24 per cent, 0.72 per cent and 0.50 per cent, respectively, after the announcement.

Shares of public sector lenders including Bank of Baroda, State Bank of India, Canara Bank and Punjab National Bank were down by over 1 per cent at around 2.35 pm (IST). Private sector lender ICICI Bank and HDFC Bank were are trading 1.44 per cent and 0.35 per cent down at Rs 300.85 and Rs 1,814.15, respectively.

In the auto space, Eicher Motors and Bajaj Auto were trading 2 per cent and 1.29 per cent lower at Rs 28350 and Rs 3122.95, respectively. Mahindra & Mahindra and Tata Motors were down by 1.09 per cent and 0.93 per cent, respectively.

Prestige (down 1.81 per cent), HDIL (down 0.61 per cent) and Phoenix (down 0.12 per cent) were also trading lower in the afternoon trade.

According to market experts, the central bank took the decision after inflation figures jumped to a seven-month high and stronger economic growth reduced the need for monetary stimulus.

RBI raised inflation forecast to 4.3-4.7 per cent in third and fourth quarters of the ongoing financial year and kept economic growth forecast unchanged at 6.7 per cent.