Rate-sensitive stocks trades higher after RBI policy decision

Rate-sensitive stocks like auto, banking and real estate were trading marginally higher on October 6 after the Reserve Bank of India’s policy.

The central bank kept rates unchanged unchanged at 6.5% for a fourth straight meeting. This was in line with Moneycontrol’s forecast and the consensus estimate.

In banking, Canara Bank and Bank of Baroda rose 1.2 percent each while Indusind Bank and State Bank of India advanced 0.7 percent each.

TVS Motors, Maruti and Tata Motors gained 1 percent each while Bajaj Auto, Hero Moto and M&M climbed 0.5 percent each.

In real estate, Godrej Properties and Lodha jumped 1.2 percent each while DLF and The Phoenix Mills rose 1 percent each.

In September, auto, banking, and real estate stocks rose, but they dipped in October so far. Banking stocks fell due to weaker CASA growth and auto stocks weaker due to a slight slowdown in auto sales.

Real estate stocks also weakened due to declining affordable home sales. In September, BSE Realty and Auto surged over 3 percent, while BSE Bankex rose by 1.6 percent. In October, so far, the auto index is down 1 percent, and realty and bankex 0.1 percent each.

Read: Tata Technologies IPO: Financials, shareholding, comparison with peers in 5 charts

“By continuing its hawkish rate hold, the Reserve Bank of India is striking the right balance between supporting growth and buffering against the risk of additional Federal Reserve hikes and higher oil prices. Sticking to its “accommodation withdrawal” stance helps send the message that the central bank is committed to bringing inflation down to its 4% target over the medium term. Even so, we think the next move will be a cut, once the latest run-up in inflation has passed”, said Abhishek Gupta economist at Bloomberg.

Auto monthly numbers

In September, passenger vehicle and two-wheeler sales saw a slight growth except for commercial vehicles, which grew in double digits. The increase in sales primarily came from passenger vehicles, reaching a record high and was driven mainly by SUVs and MPVs.

For instance, Mahindra & Mahindra achieved its highest-ever SUV sales, and two-thirds of Hyundai’s sales were in these categories as well.

Maruti Suzuki had mixed results, with strong sales in premium segment cars but a 22 percent drop in compact and mini cars.

A similar trend was seen in two-wheeler sales, where premium motorcycles performed well, but mass-market vehicles had stagnant or declining sales. Overall, two-wheeler sales in FY2023 remained below FY2019 levels.

Read: SoftBank plans to sell part stake in PB Fintech in fresh block deal of around $105 mn

Banking Q2 update

Most banks saw a decline in CASA deposits in Q2 2023 due to increased competition and higher interest rates. However, the growth in bulk term deposits helped offset the impact.

Credit growth remained healthy, slightly lower than the previous quarter.

Retail and MSME segments drove loan growth, especially in personal, mortgage, vehicle, small business, and credit card loans.

NBFCs also reported strong loan growth, with Bajaj Finance’s AUM jumping by 33 percent and L&T Finance’s retail loan portfolio rising by 33 percent, led by a 32 percent increase in disbursements in Q2.

Real estate update

In the September quarter, the top eight residential markets in India saw strong growth, with 82,612 units sold, a 12 percent YoY increase. This marked the highest quarterly sales in six years, according to Knight Frank India’s latest report.

High-end homes (Rs 1 crore and above) had a 39 percent YoY increase, mid-segment homes (Rs 50 lakh-1 crore) saw a 14 percent YoY rise but affordable homes (below Rs 50 lakh) declined 10 percent to 24,143 units.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.