Interest-rate sensitive stocks gain as RBI hikes key rate
Mumbai: Interest-rate sensitive bank, auto and realty stocks on Tuesday made handsome gains, surging up to 8.2 percent, after the RBI increased a key policy rate to tame inflation and at the same time enhance liquidity for banks.
Among the banking pack, ICICI Bank surged 6 percent, SBI rose by 3.65 percent, HDFC Bank (2.82 percent), PNB (4.61 percent), Axis Bank (5.12 percent), Yes Bank Ltd (6.91 percent).
Led by the gains in these stocks, the BSE banking index gained 4.35 percent to settle at 12,831.06, becoming the best performer among the 13 sectoral indices.
"Banking stocks were on fire and the rise was seen in both private and public sector banks. Today's movement in bank stocks does show promise for further upside," said Milan Bavishi, Head Research, Inventure Growth and Securities.
From the realty space, DLF rose by 2.49 percent, Unitech (3.89 percent), Indiabulls Real Estate (5.71 percent), Godrej Properties (1.58 percent) and Sobha Developers (0.33 percent).
Following the gains in these stocks, the BSE realty index climbed 2.44 percent to 1,327.65.
Auto stocks also saw good buying, with Maruti Suzuki India soaring by 8.19 percent, Mahindra & Mahindra (3.77 percent), Hero MotoCorp Ltd (3.25 percent), Tata Motors (1.11 percent) and Bajaj Auto (1.10 percent).
Tracking rally in these stocks, the BSE auto index surged 2.43 percent to 12,077.03.
"Markets have also taken the move positively and considering the strength of the markets currently and overall economic cycle, the markets are coming out of a contraction phase and definitely with the values the sectors like PSU banks and capital goods sectors are offering, things definitely do not look much on the darker side and next 6-12 months looks good for the overall economy," said Vivek Gupta, Director Research, CapitalVia Global Research Limited.
Housing, auto and corporate loans may become expensive with the Reserve Bank today hiking the key lending rate by 0.25 percent to contain inflation in continuation of its hard-line stance.