IRFC, Bajaj Finance to HDFC Bank — experts recommend these 5 shares to buy after RBI monetary policy meeting

Stocks to buy after RBI monetary policy: The Reserve Bank of India (RBI) left the repo rate unchanged at 6.50 percent for the seventh straight Monetary Policy Committee (MPC) meeting. However, stock market experts look at this RBI move as an opportunity for long-term investors who want to buy banking and financial stocks. They said that RBI leaving the repo rate unchanged means no cheaper money to the lenders, which may lead to some correction in these stocks. However, they maintained that the Indian economy is interlinked with global merchandise and the US Fed has already declared three rate cuts in 2024. So, it seems that the RBI is waiting for the first US Fed rate cut this year for more clarity on the rate cut timeline. They advised medium to long-term investors to look at adding or accumulating these five banking and financial shares — State Bank of India (SBI), HDFC Bank, IRFC, Poonawalla Fincorp, and Bajaj Finance.

RBI monetary policy effect on stock market

On how RBI monetary policy will impact the Indian stock market, Anil Rego, Founder and Fund Manager at Right Horizons said, “We believe markets in the near term will now be driven by the upcoming earnings season and the 2024 elections. Investors are bullish as they are favoring rate cuts in 2024 which will unanimously boost the equity markets. The banking sector is the most sensitive to changes in rate cycles and has been a major reason for incremental earnings in FY23 and in H1 of FY24 benefitting from the hikes and credit growth being robust and persistent.”

“Prolonged rate cuts will eventually lead to narrowing NIM but we expect rate cuts to begin in the last quarter and hence the trend in the banking sector is likely to continue in FY24. NBFCs will be best positioned to benefit from cuts in rates as credit growth will improve followed by banks. Also, credit-sensitive sectors like auto and real estate will see higher demand,” Anil Rego added.

“From a stock market perspective, the announcements are likely to influence investor sentiment and market dynamics. The acknowledgment of surplus liquidity and the RBI’s liquidity management efforts may lead to a positive reaction in the stock market, particularly among banking stocks. Any indication of accommodative monetary policy measures could further bolster investor confidence, potentially driving upward momentum in the stock market. However, concerns over inflation and global economic risks may temper market gains. Banking sectors could benefit from the RBI’s focus on liquidity management,” said Sonam Srivastava, Founder and Fund Manager at Wright Research.

RBI monetary policy: Stocks to buy today

Batting in favor of the banking and financial shares after the RBI monetary policy meeting, Sandeep Pandey, Founder of Basav Capital said, “RBI leaving repor rate unchanged means no extra liquidity to the Indian lenders, which may trigger some downside pressure in the banking and financial stocks. I believe the Indian central bank is waiting for the first rate cut announcement from the US Federal Reserve for more clarity on global inflation. However, the US Fed has already announced three rate cuts in 2024, which is expected to impact RBI’s stance on interest rates as well. So, one should look at the quality banking and financial stocks if there is any correction in such stocks.”

Asked about shares to buy today after the RBI monetary policy meeting outcome, the Basav Capital founder and former Deputy Vice President of HDFC Bank said, “One can look at buying or adding these five banking and financial stocks — SBI, HDFC Bank, IRFC, Poonawalla Fincorp, and Bajaj Finance.”

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.