Seven auto stocks rose by 0.29% to 11.46% at 13:19 IST on BSE in volatile trade after the Reserve Bank of India kept key rates unchanged in its third bi-monthly monetary policy review today, 5 August 2014.
Interest rate sensitive auto stocks rose in volatile trade. TVS Motor Company (up 2.32%),Eicher Motors (up 0.44%), Ashok Leyland (up 0.29%), Tata Motors (up 0.67%), Force Motors (up 11.46%), Mahindra & Mahindra (up 2.09%) edged higher. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing..
Hero MotoCorp shed 1.29% ahead of its Q1 results today, 5 August 2014.
Bajaj Auto gained 2.1%. A foreign brokerage reportedly upgraded the stock to overweight from equalweight. It said all the bad news appears to be priced in the stock and demand for two-wheelers in India will accelerate to 12 and 12.3% for FY 2015 and FY 2016 as macro factors improve along with new launches.
The BSE Auto index was up 1.03% at 15,719.05 and was the top gainer among the sectoral indices on BSE. It outperformed the Sensex, which was down 0.3% at 25,645.34.
The BSE Auto index had underperformed the market over the past one month till 4 August 2014, falling 3.34% compared with 0.92% fall in the Sensex. The index, however, outperformed the market in past one quarter, surging 16.95% as against Sensex's 14.82% rise.
The Reserve Bank of India (RBI) in its third bi-monthly monetary policy review today, 5 August 2014, kept policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. It also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL) and reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.5% to 22% of their NDTL with effect from the fortnight beginning 9 August 2014. The RBI also cut the ceiling on debt that must be held-to-maturity (HTM) by half a percentage point to 24%.
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