Rate-sensitive stocks continue to trade solid on Friday after Reserve Bank of India’s Monetary Policy Committee(MPC) left repo rate and reverse repo rate unchanged, MoneyControl reported.
The repo rate stands at 4% while the reverse repo rate remains unchanged at 3.5%. According to MoneyControl, the auto index led by Amara Raja Batteries, Tata Motors, Maruti Suzuki, and Eicher Motors increased by 0.6% following the MPC announcement.
The bank index led by IndusInd Bank, IDFC First Bank, PNB, and AU Small Finance Bank was increased by 1-3 per cent.
Speaking about the unchanged lending and borrowing rates, MPC said that it will continue with the accommodative stance as long as necessary to support a struggling economy hit by the COVID-19 pandemic.
The Consumer Price Index (CPI) inflation estimate was raised by 5.7% for the first quarter of FY22.
“The monetary policy announcements came exactly on expected lines— continuation of the accommodative monetary stance, status quo in policy rates, maintaining the FY GDP at 9.5 per cent and upward revision in FY 22 CPI inflation rates. The upward revision in CPI inflation rate to 5.7 per cent from 5.1 per cent earlier reflects the higher inflation prints in recent months,” VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, told MoneyControl.
The growth supportive monetary policy was announced keeping in mind the possibility of a third wave of COVID-19. “The need of the hour is not to drop out the guard and remain vigilant against any possibility of third-wave especially in the backdrop of rising infections in certain parts of the country,” RBI Governor Shaktikanta Das said while announcing the monetary policy.
