Realty, Bank, Auto Shares Soar On RBI’s Jumbo Rate Cut

New Delhi: Interest-rate-sensitive stocks were in huge demand on Friday, with the realty index climbing nearly 5 per cent as investors cheered the Reserve Bank’s jumbo rate cut of 50 basis points. Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy.

The RBI’s six-member monetary policy committee, headed by Governor Sanjay Malhotra and consisting of three external members, voted five to one to lower the benchmark repurchase or repo rate by 50 basis points to 5.5 per cent. It also cut the cash reserve ratio by 100 basis points to 3 per cent, adding Rs 2.5 lakh crore to already surplus liquidity in the banking system.

The 30-share BSE Sensex ended the day higher by 746.95 points or 0.92 per cent to settle at 82,188.99. Among realty stocks, Godrej Properties surged 6.75 per cent, DLF jumped 6.61 per cent, Oberoi Realty climbed 6.41 per cent, Prestige Estates Projects rallied 5.03 per cent, Sobha (4.72 per cent), Macrotech Developers (3.68 per cent), Signature Global (India) Ltd (3.02 per cent), The Phoenix Mills (2.31 per cent), Anant Raj (1.20 per cent) and Brigade Enterprises (1.19 per cent). The BSE realty index jumped 4.74 per cent to 8,069.29.

“The RBI’s aggressive rate and CRR cuts triggered a powerful rally in Indian equities, with the Nifty-50 breaking above 25,000 and the Bank Nifty hitting a record high. Rate-sensitive sectors -- banks, realty, and auto -- led the gains, fuelled by expectations of stronger credit growth and improved liquidity,” Satish Chandra Aluri, Analyst, Lemonn Markets Desk, said.

The cut in CRR will take effect in four stages between September and December. From the auto index, Ashok Leyland climbed 3.53 per cent, Maruti went up by 2.64 per cent, Hero MotoCorp (2.17 per cent), Bharat Forge (2.09 per cent), Mahindra & Mahindra (2.02 per cent), Apollo Tyres (1.84 per cent), Eicher Motors (1.80 per cent), TVS Motor Company (1.09 per cent), Bajaj Auto (0.92 per cent) and Tata Motors (0.24 per cent). The BSE auto index rallied 1.50 per cent to 53,094.15.

Among bank counters, Axis Bank advanced 3.15 per cent, IndusInd Bank rose 2.50 per cent, Bank of Baroda (1.65 per cent), Kotak Mahindra Bank (1.61 per cent), HDFC Bank (1.42 per cent), State Bank of India (0.84 per cent), Federal Bank (0.39 per cent) and ICICI Bank (0.16 per cent). The BSE bank index jumped 1.25 per cent to 63,556.36.