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Interest rate-sensitive bank, auto, realty stocks decline

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NewsDrum Desk
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New Delhi, Feb 8 (PTI) Interest rate-sensitive bank, auto and realty stocks declined on Thursday amid uncertainty about the timing of interest rate reduction after the Reserve Bank of India's monetary policy decision.

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The Reserve Bank of India on Thursday decided to keep the policy rate unchanged for the sixth time in a row in view of global uncertainty and the need to bring down retail inflation to 4 per cent.

Following RBI's decision to maintain the status quo, banks and financial institutions will largely keep lending rates stable.

Among bank stocks, AU Small Finance Bank fell by 3.74 per cent, Kotak Mahindra Bank declined by 3.53 per cent, ICICI Bank (3.34 per cent), Axis Bank (2.95 per cent), IDFC First Bank (2.61 per cent), IndusInd Bank (2.52 per cent), HDFC Bank (1.84 per cent) and Federal Bank (1.71 per cent).

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The BSE Bankex index fell by 1.80 per cent to 50,976.10.

"Nifty opened positive but soon witnessed selling pressure post RBI policy outcome where the committee tone was cautious. Rate-sensitive sectors ended in red after RBI maintained the status quo for the sixth consecutive time and did not provide any time frame for an interest rate cut," Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said.

RBI had last raised the repo rate in February 2023 to 6.5 per cent after six consecutive rate hikes, aggregating to 250 basis points since May 2022.

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Announcing the decision of the Monetary Policy Committee (MPC), RBI Governor Shaktikanta Das on Thursday said it has decided to keep the policy repo rate unchanged on the basis of an assessment of the current and evolving macroeconomic situation.

MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth, he said.

From the auto pack, the stock of Eicher Motors dropped by 2.96 per cent, Apollo Tyres declined by 2.45 per cent, Samvardhana Motherson International (2.04 per cent), Mahindra & Mahindra (1.91 per cent), Maruti (1.75 per cent), TVS Motor (1.06 per cent), Ashok Leyland (0.98 per cent), Tata Motors (0.97 per cent) and MRF (0.06 per cent).

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The BSE auto index went lower by 0.94 per cent to 45,093.49.

Among the realty counters, shares of Godrej Properties declined by 3.49 per cent, Sobha Ltd (2.88 per cent), Macrotech Developers (2.56 per cent) and Prestige Estates Projects (1.09 per cent).

Following a drop in realty stocks, the BSE realty index dipped 0.73 per cent to 6,921.27.

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"Selling intensified after the RBI's monetary policy announcement in the first half with heavy selling in private banking scrips leading the slump. Banking industry has been facing liquidity issues in recent times and with the central bank's decision showing no signs of interest rate cut in the near term, investors slashed their positions in financial stocks," Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, said.

The 30-share BSE Sensex fell by 723.57 points or 1 per cent to 71,428.43, and the Nifty declined by 212.55 points or 0.97 per cent to 21,717.95.

"Though FY25 GDP growth forecast has improved, the RBI remains vigilant on inflation & banking liquidity. The incomplete transmission of the cumulative 250 bps and the inflation ruling above the target level add uncertainty about the timing of the interest rate reduction. The ripple effect was seen in the government's 10-year yield, which inched higher. A large pocket of the market slid into red like FMCG, banks, and auto. FMCG got higher impacted by weak Q3 result and downgrade in volume growth, in the near-term, due to weak rural demand," Vinod Nair, Head of Research at Geojit Financial Services, said. PTI SUM SHW

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