RBI rate cut boosts rate-sensitive stocks, surge up to 10%

Mumbai: Shares of rate-sensitive realty, bank and auto sectors were on buyer's radar Tuesday, surging up to 10 percent, after the Reserve Bank lowered the key interest rate by 0.50 percent -- the biggest cut in over three years.

Shares of Housing Development and Infrastructure surged 9.83 per cent, Indiabulls Real Estate gained 4.30 percent, DLF rose by 4.18 percent, Sobha Ltd was up 3.94 percent, D B Realty (3.45 percent), Ashiana Housing (2.13 percent), Unitech (1.48 percent) and NBCC (1.48 percent).

Tracking gains in these stocks, the BSE realty index rose by 1.99 percent to 1,368.55.

Home and corporate loans is expected to cost less as the RBI today lowered the key interest rate by 0.50 percent to bolster the economy.

Shares of IndusInd Bank went up by 2.14 percent, Bank of Baroda gained 1.66 percent, HDFC Bank (1.20 percent), Yes Bank (1.16 percent), SBI (1.02 percent), Kotak Mahindra Bank (0.74 percent), PNB (0.30 per cent) and ICICI Bank (0.11 per cent).
The BSE bank index gained 0.90 per cent to 19,769.15.

Within minutes of RBI policy, Andhra Bank cut its benchmark lending rates by 0.25 percent.

The country's largest lender SBI also slashed minimum lending or base rate by 0.4 percent to 9.3 percent.

From auto space, Maruti Suzuki climbed 3.12 percent, Mahindra & Mahindra was up 2.48 percent and Tata Motors rose 1.19 percent.

Led by gains in these scrips, the auto index rose by 0.76 percent to 17,143.93.

"The RBI's 50 bps rate cut is an unexpected bonanza," said Arun Gopalan Vice President Research at Systematix Shares and Stocks.
In its fourth bimonthly monetary policy for the current fiscal, RBI cut benchmark repurchase (repo) rate from 7.25 percent to 6.75 percent, lowest in four-and-half-years.

The BSE Sensex, which was over 300 points down at one point during the day, staged a recovery after the announcement of the policy and ended 161.82 points higher at 25,778.66.

"Repo rate cut of 50 bps by RBI is a positive surprise. On the back of a slowing private investment, RBI has delivered what industry wanted with an aggressive rate cut. Today's policy action should be accepted positively by both equity and debt markets," said Jyoti Vaswani Chief Investment Officer of Future Generali Life Insurance.