Shares of automobile companies were trading higher by up to 5 per cent on the National Stock Exchange (NSE), after the Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy meeting on Thursday cut the repo rate by 25 bps to 6.25 per cent from 6.50 per cent, earlier.
The MPC also changed its stance to 'neutral' from the 'calibrated tightening' adopted in October meet last year.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth, the committee said in its press release. CLICK HERE TO READ FULL REPORT
Ashok Leyland, TVS Motor Company, Bajaj Auto, Apollo Tyres, Motherson Sumi Systems, Tata Motors, Hero MotoCorp and Mahindra & Mahindra from automobiles and related sectors were up between 2 per cent and 5 per cent on the NSE.
At 11:59 am, Nifty Auto index, the largest gainer among sectoral indices, was up 1.75 per cent, as compared to a 0.28 per cent rise in the benchmark Nifty 50 index. The other interest rate sensitive sectors like Nifty Realty and Nifty Bank indices up 0.3 per cent each, while Nifty PSU Bank index was up 0.61 per cent on the NSE.
Thus far in the current calendar year 2019, Nifty Auto index has underperformed the market by falling 7 per cent mainly due to moderate volume growth on account of challenges like higher insurance costs and lower financing available. In comparison, the Nifty 50 index was up 1.8 per cent till yesterday.