SBI, Axis Bank, BoB, M&M, and Uno Minda: Banking, financial stocks trade lower after RBI rate cut, autos shine

While banking and financial services stocks were trading in the red, real estate and auto were in the green.

The repo rate is the interest rate at which the central bank of any country (RBI, in the case of India) lends money to commercial banks in case of any shortfall of funds.

RBI Governor Sanjay Malhotra, in his address, said that the six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously decided to cut the rate by 25 basis points.

Last seen, the BSE BANKEX index was trading at 56,676.67 levels, down 382.69 points, or 0.67%. The top losers on the index were SBI, Bank of Baroda, Axis Bank, ICICI Bank, and Canara Bank. The stocks slipped up to 1.5%.

The BSE Financial Services index was trading at 11,206.38, down 30.37 points, or 0.27%.

Banking stocks declined in the trade as the RBI maintained a 'neutral' policy stance, hinting at a cautious approach amid global uncertainties and inflation risks.

Commenting on the impact on the realty sector, Anuj Puri, Chairman of the ANAROCK Group, said, "In terms of the impact on the housing sector of the RBI's decision to reduce the repo rates by 25 bps, this piggybacks on the recent taxation benefits announced in the Union Budget. As such, it is undeniably a major boost to homebuyers, particularly for affordable housing buyers. Many first-time homebuyers who had been hesitating to take the plunge are likely to make their move now as home loan rates will reduce—as long as banks pass on the key benefits to buyers."

Puri added that commercial real estate, especially office spaces, can also benefit from lower borrowing costs for businesses, and lower rates also make REITs more appealing since investors look for stable returns in a falling interest rate environment. "That said, the rate cut may be less effective by rising property prices if inflation remains as high as it is now. Also, it remains to be seen if banks pass on the full benefit to borrowers in a timely and seamless manner," Puri opined.

The BSE AUTO index was also trading at 52,571.78 levels, up 234.35 points, or 0.45%.