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Interest rate sensitive auto, banking and realty stocks received severe drubbing on the Dalal Street today as jittery investors abandoned the shares, following the RBI’s move to raise key policy rates by 50 basis points.
Auto pack, led by Tata Motors which lost 5.30 per cent to close the day at Rs 1,163.45 on the BSE, emerged as the worst hit among the 13 sectoral indices.
Profit booking was also seen at the counters of other blue-chip auto companies. Bajaj Auto shed 5.02 per cent to end the day at Rs 1,366.95, while Mahindra & Mahindra slipped by 4.47 per cent and Hero Honda by 1.86 per cent. Led by losses in these stocks, the BSE auto index settled lower by 3.74 per cent, or 353.90 points, at 9,108.98.
“Rate sensitive sectors like banking, real estate and auto bore the brunt of the selling pressure amid concerns that hardening interest rates will hit demand for new loans, housing and vehicles,” IIFL Head of Research (India Private Clients) Mr Amar Ambani said.
On the financial front, State Bank of India saw massive selling pressure and fell by 4.03 per cent to close the day at Rs 2,583.10. ICICI Bank’s shares, too, dropped by 2.76 per cent, while HDFC Bank fell by 2.40 per cent. The BSE banking index slipped by 3.11 per cent to close at 12,406.67.
From the realty pack, DLF shed 2.56 per cent and D B Realty fell by 5.31 per cent, dragging the realty index down by 2.91 per cent to finish the day at 2,140.90.
“A 50 bps hike in interest rates led to a sharp downfall in the market. Further, a hike in savings deposit rate proved to be too much for the banking sector which plummeted on the policy announcement. Interest rate sensitive sector stocks like realty and auto, too, got hammered,” Bonanza Portfolio Limited Senior Research Analyst Mr Shanu Goel said.
The Reserve Bank today raised the short-term lending (repo) rate by 50 basis points to 7.25 per cent in a bid to check inflation. The reverse repo rate has been raised by 50 basis points to 6.25 per cent.
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