Best Stock Picks to invest for 2016 post RBI rate cut

Best Stock Picks to invest for 2016 post RBI rate cutBest Stock Picks to invest for 2016 post RBI rate cut

Mr. Raghuram Rajan, RBI Governor surprised every one with 50 basis points cut in recent RBI Repo rate cut. It would have made you cry if you are investing in bank fixed deposits as FD rates would come down in future. However, there are several sectors which are going to benefit from this RBI Rate cut. Which are the best stock picks to invest for 2016 post this RBI rate cut? Beyond,  RBI rate cut impact, are there any good stock picks which investor can invest in short to medium term? In this article, I would analyse, Best Stock Picks for 2016 and beyond RBI rate cut, which stocks can do well in coming months.

Also Read: What is RBI Monetary Policy and how investors would benefit / looses out of it?

Why Stock Markets are moving in positive direction now?

For the past few weeks, Indian stock markets have been in correction mode. Global stock markets are in RED. Indian SENSEX has been hovering around 26K for the past few days without any positive news. FII’s has been the net sellers in Aug and Sep-15. RBI expects inflation to fall below 6% by Jan-2016 and below 5% by Jan-Mar quarter of 2017. With such anticipation, RBI had 50 basis points rate cut which is good news to investors and to Indian economy. If RBI predictions goes right, there could be another 50 to 100 basis points cut in 2016. This is creating positive news in Indian Stock markets as it would pump-in more money and it would boost growth in Indian economy.

Which sectors would get impacted with RBI repo rate cut?

There are several sectors / stocks that would get benefited with such RBI rate cut.

  • This would boost sectors and stocks mainly Interest sensitive segments like Construction, Capital Goods, Consumer durable goods, Automobiles and Real Estate.
  • RBI has raised FPI limit in government securities and allowed companies to raise ECB in rupee bonds.
  • Rate cut news is negative to banking sector as interest rates on loans offered would come down, but cost would continue to increase. This would impact heavily to PSU Banks as they need to pay 15% wage hike.

Best Stock Picks to invest for 2016 post RBI rate cut

  • Housing finance companies like HDFC, LIC Housing Finance, Canfin homes would benefit majorly from this rate cut. RBI has been stressing on affordable housing and reduction in repo rate would reduce interest rates, thereby boosting the sales of such companies. I could see Positive outlook of these stocks in coming months.
  • Automobile is another sector that would benefit from this repo rate cut. Reduced interest rates would increase sales of companies like Maruti, Tata Motors, Ashok Leyland etc., Tata motors and Ashok Leyland has been lagging behind for the past few months in stock price appreciation, hence should see good jump in coming months.
  • Beyond repo rate cut, some of the companies like TCS and Wipro would continue to gain from currency benefit.

Also Read: How to pick best blue chip stocks to invest for long term?

Conclusion: I am not saying you should invest in these sectors/stocks now. But these sectors / stocks could outperform in coming months. If you are planning to invest in stocks, you can buy such best stock picks for investment during market corrections.

Disclaimer: I am holding some of the above mentioned stocks and would continue to buy them during market corrections. The idea of anlaysing these sectors or relevant stocks in this article is to create awareness and education about sectors and stocks which may perform well during RBI monetary policies review or change in government policies. One should NOT constitute this as investment advice to buy or not to buy. Please consult your investment advisor before you invest in such stocks which are high risk investment options.

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Best Stock Picks to invest for 2016 post RBI rate cut


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