3 Rate-Sensitive Stocks to Keep on Radar Amid 50 bps Hike!

  • Stock Market Analysis

As the RBI made its third hike of the year, raising interest rates by 50 basis points to 5.4% which was largely in line with the market expectations, and has also given a hint of a further rate hike this year, investors are now looking out for opportunities in the pockets which would likely to be benefitted by this rate hike cycle. Here’s a list of such stocks which are also looking great on the charts.

ICICI Prudential (LON: PRU ) Life Insurance Company

ICICI Prudential Life Insurance Company Ltd (NS: ICIR ) is one stock that is looking extremely good on the charts. The stock has given a clean breakout on the daily chart above the resistance of INR 570, as it surged 3.54% to INR 580 today. The medium-term chart structure of the stock is looking lucrative for momentum traders as well.

Daily chart of ICICI Prudential Life Insurance

Image Description: Daily chart of ICICI Prudential Life Insurance 

Image Source: Investing.com

Insurance companies are some of the biggest beneficiaries of rate hikes because these insurers hold a lot of debt securities in their portfolio, bought from the income they receive via premiums. As rates go up, income generated from these fixed-income securities also goes up, materializing into higher profits for the company. 

RBL Bank 

The banking sector has a direct correlation with the interest rate cycle. A period of increasing rates is positive for the banks as higher rates help them to expand their margins as they can charge more on the lending. The NIM (net interest margins) is the primary source of income for a banking institution and an uptick in the rates eases off the pressure on NIMs.

Daily chart of RBL Bank

Image Description: Daily chart of RBL Bank 

Image Source: Investing.com

RBL Bank Ltd (NS: RATB ) is one of the most beaten-up banks currently in the market. Not just that, the stock has already started to show a noticeable recovery from the 52-week low, and after reporting the highest quarterly consolidated net income of INR 208.66 crores in Q1 FY23 (since Q1 FY19), a turnaround story is visible. 

Manappuram Finance

An NBFC Manappuram Finance Ltd (NS: MNFL ) with the same working principles, higher repo rates help it to lend at higher rates is the last stock on the list. The company’s chart structure is eye-candy to technical analysts out there. A picture-perfect rounding bottom at the 52-week lows, followed by a consistent and non-volatile uptrend is what makes it special.

Daily chart of Manappuram Finance

Image Description: Daily chart of Manappuram Finance

Image Source: Investing.com

Compared with the 52-week high, the stock is still trading at a discount of around 51%, giving it a massive upside potential and a limited downside. There is a decent resistance around INR 125, which could be a hurdle for the stock in the immediate future. 

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
  • Anshuman Mohapatra @Anshuman Mohapatra
    For insurers, who are already holding debt securities (which are largely fixed rates), any int rate hike will lead to MTM losses, not higher interest income as mentioned.
    Like 0
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Hi Anshuman, you are right on the fixed-rate bonds but here I am talking about the floating-rate ones. Second, the losses you r talking about are only notional, at rhe maturity there are no realised losses.
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
  • Gajanan Mane @Gajanan Mane
    perfect analysis...hope positive uptrend is attained
    Like 1
    • Waheguru S @Waheguru S
      Nifty and World Markets are down in near term Be Cautious
      Like 1
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100

Related Articles