Rate-sensitive stocks stay steady

By Ashley Coutinho

Shares of interest rate-sensitives companies remained steady despite the 50-bps rate hike by the RBI, as most of policy action was priced in. The BSE Bankex and BSE Realty were up 0.5% and 0.2%, respectively, while BSE Auto shed 1.1%. This was on a day the benchmark BSE Sensex gained 0.1%.

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“We have seen system liquidity tightening since RBI started withdrawing excess liquidity, and system credit growth improved to 14%. With credit growth looking up, we believe the banks with a higher share of floating rates and a robust CASA-led deposit franchise should be placed well in this increasing interest rate environment,” said Naveen Kulkarni , chief investment officer, Axis Securities.

Among autos firms, TVS Motors (1.5%) and Escorts (0.5%) were among the gainers while M&M, Eicher Motors and Maruti shed between 1.5% and 2%. Macrotech Developers and Phoenix Mills were up 2.5% and 1.6%, respectively, while Godrej Properties and Sunteck Realty were top losers among real estate firms, shedding more than 1% each.

“Passenger vehicles and CVs are in a sweet spot amid a fall in metal and crude oil prices. Two-wheelers, however, are export dependent and it remains to be seen how the slowdown globally impacts their sales,” said Deepak Jasani, head of retail research at HDFC Securities.

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The rate hike of 50 bps is expected to have at least short-term repercussions on the overall housing demand. Increased input costs have already compelled many developers to hike property prices in the first half of 2022.

“The rate hike whammy comes along with the inflationary trends of primary raw materials, including cement, steel and labour, that have recently led to a rise in property prices. Together, these factors – rising home loan rates and construction costs – will impact residential sales that did reasonably well in the first half of 2022,” said Anuj Puri, chairman, Anarock Group.According to Anarock Research, there was an 8% quarterly decline in new housing launches across top seven cities in the second quarter of 2022.