Auto, realty and finance stocks slide on RBI rate hike

Mumbai: Interest rate sensitive realty, bank and auto stocks today plunged during the noon trade on the BSE after the RBI hiked short-term lending and borrowing rates sharply by 50 basis points, a move that would make all personal and corporate loans more expensive.

Market experts said investors lost confidence as the RBI’s decision to hike interest rates by 50 basis points was above the market expectation.

The worst hit among the 13 Sensex sectoral indices were realty stocks. Realty major DLF’s shares fell by 3.85 percent to hit a low of Rs 234.60, while Unitech slipped by 3.34 per cent to touch a low of Rs 34.70 on the BSE.

While DB Realty was trading lower by 2.65 percent, Orbit Corporation shed 2.69 per cent and Sobha Developers 2.57 per cent. Led by losses in these stocks, the BSE Realty index was quoting down by 2.70 per cent at 2,163.15.

Similarly, financial stocks too witnessed massive sell-off, with ICICI Bank shedding 3.11 per cent to trade at Rs 1,040.80. SBI (2.49 percent), HDFC Bank (1.38 percent), Yes Bank (2.63 percent), PNB (2.74 per cent), Bank of India (4.21 percent)also showed a decline.

Following the sharp fall in these stocks, the BSE Banking index was trading at 12,723.45, down 2.23 percent. “Banking stocks which have been rising in the last 4-5 weeks on account of expectations of end-of-rate increase cycle, will have some immediate negative impact because of the increases,” MAPE Securities Head of Research Kislay Kanth said.

The RBI today hiked short-term lending and borrowing rates sharply by 50 basis points , the third increase in as many months to tame high inflation. With today’s increase of 0.50 percent, the short-term lending (repo) rate has been hiked to 8 percent and the short-term borrowing (reverse repo) rate to 7 percent.The RBI, however, has retained the cash reserve ratio (CRR) at 6 percent.

From the auto pack, Mahindra & Mahindra was the worst hit as the scrip was trading lower by 3.16 per cent at Rs 724.80.

Tata Motors (2.42 per cent), Maruti Suzuki (1.50 percent), Bajaj Auto (1.74 percent), Ashok Leyland (1.14 percent) also showed a fall.

Hit by losses in these stocks, the BSE Auto index was trading down by 1.65 per cent at 8,833.13 during the noon trade.

The Bombay Stock Exchange (BSE) 30-share Sensex was also trading lower by 282.48 points or 1.50 per cent at 18,588.81 at 1207 hours.

In an interview with CNBC-TV18, Siddharth Bhamre, head of equity derivatives at Angel Broking sees the market drifting down towards 5,500-5,550 levels. He also feels that the Nifty does not see any immediate threat to the 5,500 strong support zones despite the 50 bps rate hike.See video

PTI