Interest rate-sensitive auto, realty, bank stocks rally after RBI policy decision

Among auto firms, Tata Motors jumped 2.56%, TVS Motor by 2.23%, Maruti Suzuki India by 1.59%, Apollo Tyres by 1.05%, MRF by 0.98%, and Hero MotoCorp by 0.76%.

The BSE Auto index rose by 1.30% to 60,068.09.

Realty stocks were also in demand, with Macrotech Developers soaring 4.60%, Phoenix Mills by 4.37% DLF by 2.14%, Mahindra Lifespace by 1.53% and Godrej Properties by 0.56%.

On the other hand, Sobha slipped 0.73% on the exchange.

The realty index jumped 2.55% to 8,249.24.

From the bank space, State Bank of India climbed 2.47%, Axis Bank jumped 2.41%, ICICI Bank by 1.54%, Kotak Mahindra Bank rose 0.38%, IndusInd Bank went up 0.31%.

Meanwhile, Federal Bank declined 1.12%, Bank of Baroda (0.61%) and HDFC Bank (0.32%).

The BSE Bankex index climbed 1.10% to 58,439.15.

Among the NBFC stocks, Bajaj Housing Finance soared 4.01%, Bajaj Finance jumped 2.56 per cent, Bajaj Finserv by 1.55 per cent, SBI Cards and Payment Services climbed 1.35 per cent, LIC Housing Finance by 0.88 per cent and Jio Financial Services went up by 0.06 per cent.

The BSE Financial Services jumped 77.29 points or 0.68 to trade at 11,523.34.

The 30-share BSE Sensex climbed 255.87 points or 0.31% to 81,890.68. In the intraday trade, the equity benchmark index surged 684.4 points or 0.83% to 82,319.21.

The Reserve Bank of India on Wednesday decided to keep the policy rate unchanged for the tenth time in a row but changed its stance to 'neutral' that may lead to a cut in the forthcoming policies.

RBI maintained the status quo despite the US Federal Reserve lowering the benchmark rates by 50 basis points last month. The central banks of some developed nations have also reduced their interest rates.

Announcing the fourth bi-monthly monetary policy for the current financial year, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 6.5%.

The RBI has maintained status quo on benchmark interest rate since February 2023.

Further, RBI Governor Shaktikanta Das also warned of action against those non-banking financial companies (NBFCs) who are pursuing unsustainable practices to push growth.

In a strongly-worded statement while announcing the bi-monthly policy review, Das asked such NBFCs to be sincere, fair and follow sustainable practices.

According to Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities, the RBI has shifted its stance from a "withdrawal of accommodation" to a "neutral" position while maintaining the repo rate at 6.5%.

This decision signals a clear focus on domestic economic conditions, prioritizing them over aligning with the U.S. Federal Reserve's rate movements. The neutral stance provides the RBI with the flexibility to adjust interest rates in response to evolving inflation dynamics.

With one uncertainty out of its way, the market participants will now start focusing on earnings season. Indian markets are likely to continue their recovery after the six-day losing streak, Sheth added.