What to expect from markets on Oct 5 following rate cut by RBI

Reserve Bank of India came out with a surprise that cheered Dalal Street's mood at the end of Tuesday’s trading session. Though, there was not a significant move from indices there will be more action on October 5.After announcement of monetary policy, Bank Nifty remained upbeat and increased by 0.43 per cent to 19672.7 on an intraday basis. Meanwhile, BSE Sensex and Nifty 50 also rose by 0.32 per cent and 0.36 per cent respectively on an intraday basis.

The rate cut of 25 basis points from first ever formed monetary policy committee (MPC) will inject liquidity in the system and help achieve closer to 8 per cent growth in the current financial year. RBI has pegged the GVA growth of 7.6 per cent for the current fiscal year and 7.9 per cent the year after.

RBI has cut interest rate from 6.5 per cent to 6.25 per cent to boost consumption in Asia’s third largest economy. Meanwhile, the central bank maintained the cash reserve ratio (CRR) at 4 per cent and the statutory liquidity ratio (SLR) at 20.75 per cent.

Stocks that can be watched out after Policy

The rate cut will improve sentiments across customers for buying homes with cheaper loans and EMIs, snd cheaper car loans will boost sales for automobile companies in future. There will be a positive bias in realty companies, which may witness significant sales in near term. Overall lending cycle will improve banking companies.

ICICI Bank, Axis Bank will be watched out on October 5. From automobiles sector, Ashok Leyland, Tata Motors, Maruti Suzuki, Hero MotoCorp, Bajaj Auto will be focused on Wednesday. There will be significant movement in home finance companies such as Dewan Housing Finance, Indiabulls Housing Finance, Repco Home Finance and Gruh Finance.