Rate-sensitive stocks trade mixed ahead of RBI policy; PSU banks rally led by SBI, auto stocks in the red


The Indian stock market has opened yet again on a robust note led by the PSU Bank index which spiked over 7 percent. Sensex is up 303.12 points or 0.6 percent at 50917.41, and the Nifty added 80.10 points or 0.54 percent at 14975.80.

The Reserve Bank of India’s (RBI) three-day Monetary Policy Committee (MPC) verdict is due today. Most economists expect the Monetary Policy Committee (MPC), the rate-setting panel, to vote in favour of a pause on February 5 and continue with the accommodative stance.

In all likelihood, the RBI is expected to announce a pause and continue with the accommodative stance.

“Considering the threat arising from surplus liquidity on inflation, we expect the RBI to focus on squeezing excess liquidity from the system,” said M Govinda Rao, Chief Economic Adviser at Brickwork ratings.

The PSU Bank index jumped over 7 percent and is the outperforming sector ahead of the RBI policy announcement. The surge was led by State Bank of India which zoomed 10 percent hitting upper circuit of Rs 390 per share on BSE.

Brokerage firm ICICIdirect has revised its rating from hold to buy with a revised target price of Rs 410 (earlier Rs 290), valuing the stock at ~1x FY23E ABV for standalone bank and subsidiaries valued at Rs 132 post holding company discount. Motilal Oswal has maintained buy with a target price of Rs 475/share.

CLSA has also maintained a ‘buy’ call on the stock and raised its target to Rs 560 per share from Rs 385 earlier. It expects a big rerating for the stock on the back of much better than expected Q3 earnings, according to a CNBC-TV18 report.

The other gainers included Bank of Baroda, Indian Bank, PNB, Central Bank of India and Canara Bank.

On the other hand, the auto index is trading flat with individual names trading mixed. Share price of Hero Moto was up a percent followed by Exide Industries while Mahindra & Mahindra, Ashok Leyland, Bajaj Auto and Tata Motors traded in the red.

Nifty Realty gained over a percent with Godrej Properties adding 3 percent followed by DLF, Brigade Enterprises, Mahindra Lifespace, Oberoi Realty and Phoenix Mills.

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