Mumbai: High value consumption got a further boost from the 25 basis points repo rate cut after the rural relief package and income tax relief announced in the interim Budget last week.
Auto, consumer durable and NBFC stocks rallied after the repo rate was cut to 6.25 per cent, which kindled hopes of more rate cuts of up to 25 to 50 basis points this year. Other rate sensitive bank and realty stocks had a mixed response.
Though Sensex and Nifty-50 closed flat, the RBI announcements led to buying in select consumption related stocks.
Falling automobile sales could see a revival with loans getting cheaper along with the rural relief package announced in the interim Budget. Vehicle stocks that gained on the BSE included Ashok Leyland (6.18 per cent), Eicher Motors (3.35 per cent), Tata Motors (2.64 per cent), Bajaj Auto (3.03 per cent), Hero MotoCorp (2.01 per cent), Maruti Suzuki (1.30 per cent) and Mahindra & Mahindra (1.01 per cent).
Motilal Oswal, chairman & MD, Motilal Oswal Financial Services, said, “If oil prices remain subdued and inflation remains below the RBI’s mandate of 4 per cent, another rate cut in April cannot be ruled out.”
Other consumption-driven stocks that gained included Bajaj Electricals (9.44 per cent) Crompton Greaves Consumer Electricals (2.23 per cent), Voltas (1.72 per ccent), Havells India (1.29 per cent).
The RBI announcing measures to further ease the liquidity situation for the NBFCs led to gains for NBFC stocks like Shriram Transport Finance (3.17 per cent), Mahindra & Mahindra Financial Services (3.54 per cent), Gruh Finance (5.14 per cent) and LIC Housing Finance (1.47 per cent).
Sanjay D Palve, MD, Religare Housing Development Finance Corporation, said, “The RBI easing norms for maintaining risk weights on bank lending to NBFCs…will free up the equity capital that allow banks to lend more to stronger NBFCs. This will help banks to improve their balance sheet as well as NBFCs which are better managed can have access to liquidity now,” Palve said.
The bank stocks had a volatile session but had a mixed closing, the gainers included City Union Bank (1.99 per cent), Federal Bank (0.82 per cent), Axis Bank (0.75 per cent), Kotak Mahindra Bank (0.34 per cent) and Yes Bank (0.26 per cent). The biggest lenders State Bank of India and HDFC Bank closed flat, losing 0.21 per cent and 0.28 per cent, respectively.
Rate-sensitive realty stocks too were mixed, the gainers included Sunteck Realty (1.17 per cent), Mahindra Life (0.95 per cent), Phoenix (0.63 per cent) and Godrej Properties (0.57 per cent) while Indiabulls Real Estate lost 3.66 per cent.
