Bank, realty, auto shares drop up to 7% despite RBI repo rate cut; IndusInd Bank, BoB, Yes Bank among top losers

New Delhi: Interest rate sensitive bank, auto and realty shares came under selling pressure on Thursday falling up to 7 percent even as the RBI slashed the policy rate.

Among bank scrips, IndusInd Bank dropped 6.97 percent, Bank of Baroda plunged 6.33 percent, Yes Bank 6.15 percent, SBI 4.34 percent, Federal Bank 2.69 percent, ICICI Bank 1.75 percent, Axis Bank 1.38 percent, HDFC Bank 1.18 percent and Kotak Mahindra Bank 1.05 percent on the BSE.

Led by plunge in these scrips, the BSE bank index declined 2.34 percent to close at 34,653.44.

In a move that may lead to lower home, auto and other loan EMIs, the RBI on Thursday cut interest rates for the third time this year by 25 basis points to their lowest level in nine years.

"As the rate cut was in line with expectations which had already been factored in, the indices did not cheer the rate cut and continued to trickle down," said Umesh Mehta, head of Research, Samco Securities.

 Bank, realty, auto shares drop up to 7% despite RBI repo rate cut; IndusInd Bank, BoB, Yes Bank among top losers

Representational image. Reuters.

Realty shares also faced selling pressure with Godrej Properties plunging 4.13 percent, Oberoi Realty 3.60 percent, DLF 2.53 percent, The Phoenix Mills 2.22 percent, Omaxe 1.64 percent, Sobha 1.56 percent and Sunteck Realty 1.54 percent.

The realty index fell 1.84 percent to 2,174.03 at close of trade.

The RBI cut the repo rate to 5.75 percent and reverse repo rate to 5.50 percent and expected banks to transmit these to home, auto and other loan borrowers faster.

"The Nifty had rallied in the recent days, leading up to the RBI policy. With a 25 basis points repo cut widely anticipated, indices corrected post the announcement. A possible reason of the fall could also be that there was no mention in the policy about addressing the liquidity stress in the NBFC space.

"With recent news around DHFL and the possible contagion effect, several financials corrected heavily today. However, I believe that market will soon take cognizance of the change in policy stance to accommodative," Amar Ambani, president and research head, YES Securities said.

From the auto pack, MRF fell 3.12 percent, M&M 2.48 percent, Tata Motors 2.08 percent, Ashok Leyland 1.77 percent and Maruti Suzuki India 0.93 percent.

Losses in these scrips dragged down the BSE auto index which dipped 1 percent to close at 18,556.56.

The broader market also depicted weak trend. Following the RBI announcement, the BSE 30-share index plummeted 553.82 points, or 1.38 percent, to settle at 39,529.72.

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Updated Date: Jun 06, 2019 18:02:14 IST