Mumbai: Rate-sensitive stocks fell despite the 25 basis point repo rate cut announced by the Reserve Bank of India, as sentiments turned cautious on RBI lowering GDP growth projections by 80 basis points to 6.1 per cent from 6.9 per cent and the earnings season starting next week also expected to be lacklustre.
RBI’s latest repo rate cut has brought down the repo rate to 5.15 per cent, lowest in 9 years but due to lack of transmission by the banks, markets was not euphoric despite 135 basis points of repo rate cut delivered by the central bank so far in the calendar year, analysts said.
Rate-sensitive sectors fell on the BSE led by BSE Bankex (-2.45 per cent), Consumer Durable (-2.10 per cent) and Capital Goods (-1.95 per cent) and Realty (1.15 per cent). NSE’s Nifty Bank Index fell 2.40 per cent.
The top losers among the banks were Federal Bank (3.60 per cent), Kotak Mahindra Bank (-3.45 per cent), ICICI Bank (-3.32 per cent), Bank of Baroda (-3.03 per cent), RBL Bank (-3.03 per cent), HDFC Bank (-2.76 per cent), SBI (-1.77 per cent), PNB (-2.29 per cent) and Axis Bank (-2.00 per cent).
Motilal Oswal, Managing Director, Motilal Oswal Financial Services said, “RBI cut policy repo rates by 25 bps to 5.15 per cent. This is a very good level of indicative rates. The issue is transmission of these rates in the system. RBI has been asking banking system to offer loans at a level that reflects the benchmark cut, but the system is reluctant to pass on, due to risk aversion. It is a dichotomy that the one needs money does not get it and the one who is offered does not need it!”
“Equity markets are cautious and watchful about the earnings season which at this juncture looks less enthusiastic. There is a possibility that equity markets will trade cautious and range bound,” Ostwal said.
Ajit Mishra, Vice President—Research, Reli-gare Broking said, “Markets plunged sharply lower and lost over a per cent on weak domestic cues. Anxiety ahead of the RBI policy outcome capped movement. Sentiment was dented as the RBI lowered its growth forecast which triggered a sharp decline across the board.”
