reserve Bank of India
A rally is being seen in the stock market today. The main indices of the market, both Sensex and Nifty are trading with green marks. This morning, after the Reserve Bank of India reduced the repo rate in the monetary policy meeting, the market brightened. Along with this, shares related to some specific sectors like banking, NBFC, auto and real estate saw an increase of up to 2%. Low retail inflation and better price estimates gave RBI an opportunity to support economic growth.
The Monetary Policy Committee (MPC) has reduced the repo rate by a total of 125 basis points since February and this time by 0.25 basis points. After the cut, the repo rate has now become 5.25%. No changes were made in August and October. At 9:46 am, before the results of the meeting, the Nifty Bank index was up 0.10% at 59,349.05. Nifty Auto was up 0.11% at 27,764.00, and Nifty Realty was up 0.26% at 892.45.
market after the decision
When the policy decision came after 10 am, Nifty Bank rose 0.6% to 59,658.65. Nifty Auto rose 0.4% to 27,850.25 and Nifty Realty rose 1% to 899.05. Financial sector shares rose by 1.5%. Shares of AU Small Finance Bank, Kotak Mahindra Bank and IDFC First Bank rose 1% to 1.5%. Shares of major HDFC Bank and ICICI Bank were also up 0.3%.
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Real estate boom
Shares of real estate companies Brigade Enterprises, Oberoi Realty, Prestige Estates and DLF rose by 1% to 2%. Among auto companies, shares of Maruti Suzuki, Eicher Motors and Mahindra & Mahindra rose by 1%. On the other hand, small-cap stocks declined 0.6%, while mid-caps remained almost flat. RBI Governor said that the MPC meeting was held on 3, 4 and 5 December. Considering the current economic situation and future projections, the MPC unanimously decided to reduce the repo rate by 25 basis points to 5.25% from now on.
Growth will get a boost
In the ET report, Dr. Ravi Singh, Chief Research Officer, Master Capital Services, said that this step is right according to the current economic environment. He said that RBI reducing the repo rate by 25 basis points to 5.25% is a decision taken at the right time to promote growth. This has been supported by low inflation and softness in core CPI. Inflation is expected to be around 2% for the whole year.
He also said that the benefits of RBI’s liquidity related steps will reach the banks soon. More money will come into the market through OMOs and dollar-rupee swaps, which will reduce the funding cost of banks and improve the loan granting process.