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Friday, January 27, 2023

RBI MPC Meeting: Rate Sensitive Sectors Appreciate Nifty Bank and Financial Services: ICICI Bank, HDFC AMC Rise

RBI MPC, Nifty Bank, Nifty Financial Service meeting: Interest rate sensitive sectors such as banking and financial services appreciated the Reserve Bank of India’s decision to raise benchmark rates by 35 basis points or 6.25 percent, the fifth consecutive increase since May 2022.

On the heels of the RBI governor’s rate hike announcement, Shaktikanta Das, Nifty Bank and Nifty Financial Services rose around 0.3 and 0.15 percent in morning trading. Both indices were trading firm in today’s volatile trade awaiting a lower rate hike.

In the banking heavyweights, ICICI Bank rose the most at around 1 per cent, followed by SBI, Axis Bank and HDFC Bank, while Kotak Mahindra Bank and IndusInd Bank were in the red. Other lenders like AU Small Finance Bank, PNB and Bandhan Bank rose 0.5 to 2.5 percent today.

Financial stocks such as PFC (Power Finance Corporation) rose more than 3 percent, followed by Shriram Transport Finance, which rose more than 2.5 percent. While ICICI Lombard, HDFC AMC, REC and Chola Finance were all up in the 0.5-2 percent range in morning trading today.

By contrast, HDFC, Bajaj Finserv and SBI Card were in the red between 0.1 and 0.6 percent today.

The Reserve Bank of India (RBI) on Wednesday raised the benchmark lending rate by 35 basis points to 6.25 percent in a bid to rein in inflation, which has been holding for above your tolerance level for the past 11 months.

With the last hike, the repo rate, or the short-term lending rate at which banks borrow from the central bank, has now topped 6 percent.

This is the fifth consecutive rate hike after rising 40 basis points in May and 50 basis points each in June, August and September. In total, the RBI has raised the benchmark rate by 2.25 percent since May this year.

The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das decided by majority opinion in favor of raising rates.

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