RBI MPC 25 bps rate hike: Banks stocks vs NBFCs - Why Jefferies India picked SBI, ICICI Bank, Axis Bank shares

Jefferies India stock recommendations | Stocks to buy today: After the announcement of a 25 bps Repo Rate hike by the Reserve Bank of India (RBI) post-three-day Monetary Policy Committee (MPC) meeting on Wednesday morning, the Jefferies India has gone highly bullish on the Indian banks. The global investment bank believes the RBI's Repo Rate hike may serve as a catalyst for Indian banks. Jefferies India believes RBI's 25 bps rate hike to 5.5% was on expected lines, but the change in policy stance to calibrated tightening lifts consensus rate-hike expectations to 75-100 bps (from 50 bps). It now prefers banking stocks over NBFCs.

Decoding the RBI's MPC meeting outcome, the Jefferies India report said, “RBI's rate hike of 25 bps to 5.5% was on expected lines, but a change in policy stance to calibrated tightening lifts consensus rate hike expectations to 75-100 bps (from 50 bps). This can be a positive catalyst for the earnings of larger private banks, PSU banks and HFCs, whereas a slight risk for smaller private banks, NBFCs and LIs. This may also help Indian banks' performance relative to global financials.”