Rate-sensitive stocks were trading firm after Federal Reserve Bank of India’s Monetary Policy Committee (MPC) on Transfiguration left key interest rates unchanged at a record low.
The repo rate remains at 4 percent and therefore the reverse repo rate at 3.35 percent. RBI Governor Shaktikanta Das said the policy stance continues to be “accommodative”.
The auto, bank indices up 0.5 percent each, while realty index trading with marginal gains.
The auto index was up 0.6 percent led by the Amara Raja Batteries, Tata Motors, Maruti Suzuki and Eicher Motors.
Among the banking names, IndusInd Bank, IDFC First Bank, PNB and AU Small Finance Bank were up 1-3 percent.
The BSE realty index was marginally up supported by the Indiabulls land , Prestige Estates Projects and Mahindra Lifespace Developers, while Oberoi Realty, Sobha and Brigade Enterprises were struggling .
The monetary policy committee (MPC) meeting began on August 4. While most analysts reckon the RBI won’t raise interest rates till next year, some expected the financial institution to supply some clues to when it’ll start reducing liquidity in its commentary.
“RBI continues to prioritize growth and maintain financial stability as far as necessary. Having said, it remains mindful of anchoring inflation expectations,” said Nitin Shanbagh, Head – Investment Products, Motilal Oswal Private Wealth.
“While maintaining a balance between growth/inflation dynamics, RBI is probably going to continue with orderly evolution of the yield curve through OMOs & GSAPs. Till durable growth recovery is seen, RBI might not resort to reversal of policy rates and would maintain sufficient liquidity within the system. However, RBI may gradually signal towards normalization of rates.”
“From investors point of view, focus should be towards investing in top quality avalanche accrual strategies through a bar-bell approach viz. combination of short term and future maturity strategies with weighted average portfolio average maturity of 4-5 years. For yield enhancement, investors also can consider investing upto 25% in well researched REITs, InVits, select high yield MLDs, etc,” he added.
