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Banking, auto stocks trade cautiously ahead of RBI policy

NEW DELHI: Rate-sensitive stocks such as banking and autos are trading cautiously ahead of the Reserve Bank of India (RBI) policy review due later today.

The RBI is expected to leave interest rates unchanged, seeing high inflation as a bigger danger than the slowest growth in almost a decade and keeping pressure on the government to revive the economy’s fortunes.

“Weaker-than-normal monsoon rains add to expectations that the RBI will keep its repo rate on hold at 8.00 per cent,” Reuters reported.

“High food prices resulting from poor rains may be beyond the reach of the monetary policy, but they can add to inflationary expectations and tempt the government into spending more on subsidies,” said the report.

The BSE Banking index was trading 0.4 per cent lower, led by losses in BoB (which was trading 1.8 per cent lower at Rs 659), Punjab National Bank (which declined 0.7 per cent to Rs 1019) and State Bank of India (down 0.6 per cent to Rs 2017).

The BSE Auto Index was trading 0.6 per cent lower, led by losses in Hero MotoCorp (which was trading 1.4 per cent lower at Rs 2002), Tata Motors Ltd (which declined 0.8 per cent to Rs 219), Bajaj Auto Ltd (which slipped 0.7 per cent to Rs 1593.95) and Ashok Leyland (down 0.9 per cent to Rs 22.10).
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