The RBI Governor Raghuram Rajan's Pongal gift of a cut in repo rate by 25 basis points (0.25 per cent) sent the capital markets into a tizzy with the banking stocks and shares of rate sensitive sectors like automobile and realty zooming in early trade today.
While the market has been betting as to when and not whether, the RBI Governor would bite the bullet in view of falling infation and clamour for a rate cut including from the Government, the timing was a surprise, though he had hinted that revision could take place "outside the policy review cycle''.
The CNX Bank Nifty was the biggest gainer among the sectoral indices, up by over 530 points with all the 12 stocks in the Bank Nifty gaining.
SBI was trading at Rs 314.80, a gain of Rs 10.10 and Axis Bank jumped by Rs 14.55 to trade at Rs 514.55. Shares of BoI, Kotak Mahindra, HDFC Bank and IndusInd Bank also made significant gains.
The Bank Nifty was up by 533.85 points, to emerge as the biggest sectoral gainer.
Auto, realty stocks
The surprise timing of the decision also had a favourable impact on the auto and realty stocks. M&M shares vaulted by Rs 37.70 to Rs 1,274.65 and Hero Motocorp jumped by Rs 36.25 to Rs 2,939.30. Bajaj Auto was trading at Rs 2,384, a gain of Rs 20.55 and Maruti jumped to Rs 3553.80, a gain of Rs 37.80. Shares of auto ancillaries like Bosch, Motherson Sumi also gained and other than MRF , all auto index stocks were up with the index gaining more than 100 points..
The impact on realty sector stocks, which have been under performing for a while due to demand contraction and high interest rates, also gained but to a lesser extent.
Godrej Properties shares were up by Rs 12.85 to Rs 264.15 and HDIL and Indiabulls Real Estate gained about Rs 3 each. Only Phoenix Ltd was trading in the red, though marginally, among the realty index stocks on the NSE.