Sensex skyrockets 1,600 points; rate-sensitive stocks surge up to 8% post RBI policy decision

Bulls have returned to Dalal Street with full force on Friday, with Sensex surging over 1,500 points, while the Nifty 50 advanced over 350 points.

Stocks in rate-sensitive sectors such as banking, finance, auto, and real estate soared by as much as 8% following the RBI's decision to maintain the interest rate unchanged.

Post the monetary policy action, benchmark equity indexes rose over 2%. The Sensex was trading 1,600 points higher, while NSE Nifty50 was above 23,250 level.

The market capitalisation of all listed companies on BSE surged by Rs 5.54 lakh crore to Rs 421.43 lakh crore.

IT and bank stops were in spotlight today as the tech pack was the top gainer with Wirpo rising over 5%, Infosys 3%, Tech Mahindra, TCS, and HCL Tech rising between 2-3% each. Other top gainers from the Sensex pack were Bajaj Finance, Ultratech Cement, and Tata Steel. Reliance was the top contributor to today's rally, giving a 192 point leg up to Sensex.

The rate-setting panel decided to maintain the repo rate at 6.5%, continuing the stance of 'withdrawal of accommodation' due to ongoing concerns regarding food inflation and global uncertainties. Meanwhile, the Monetary Policy Committee (MPC) projected the real GDP growth for FY25 to be 7.2%, up from 7%

"As anticipated, the Reserve Bank of India (RBI) maintained its key policy rates and liquidity stance unchanged during the June 2024 monetary policy review. Several indications from the governor's speech suggest that the RBI is unlikely to commence rate cuts soon. The upward revision in growth, the expectation of a non-linear disinflationary process, and a clear signal that the RBI will not mirror the Federal Reserve's anticipated monetary policy easing, imply that a rate cut in 2024 is improbable," said Sujan Hajra, Chief Economist & Executive Director, Anand Rathi.

"Today's policy is neutral for financial markets in the near term, but the medium-term implications are positive for both the equity and debt markets," Hajra said.

Following the RBI policy decision, shares of realty indices surged by up to 8%. Sunteck Realty and Siba surged by 8%, while Brigade, Lodha, and Mahindra Lifespace rose by 2-5%.

Meanwhile, Nifty Bank stocks also saw a surge of up to 3%. Bandhan Bank, Federal Bank, AU Small Finance Bank, Axis Bank, ICICI Bank, and Bank of Baroda rose by 1-3%. Shares of Bajaj Finance, SBI Card, Bajaj Finserv, and IDFC also experienced gains of 1%-3.5%.

Similarly, Nifty Auto stocks increased by up to 2.5%. Apollo Tyre, Balkrishna Industries, Ashok Leyland, Tata Motors, and M&M saw gains of 1-2.5%.

Meanwhile, the RBI left its inflation forecast for this fiscal year unchanged at 4.5%.

"Inflation growth balance is moving favorably. Growth is holding firm. Inflation continues to moderate mainly driven by the core component which reached its lowest level in the current series in April 2024. The deflation in fuel prices is ongoing, food inflation, however, remains elevated," stated RBI Governor Shaktikanta Das.

Furthermore, the RBI has maintained the Standing Deposit Facility (SDF) rate at 6.25%, and the Marginal Standing Facility (MSF) rate and bank rate at 6.75%.

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