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

What happened: The RBI raised its repo rate by 25 bps and changed its stance from Neutral to Calibrated Tightening. Jefferies India said it now prefers banking stocks over NBFCs, naming ICICI Bank, SBI, and Axis Bank as top large-cap picks. Key numbers: Repo rate hiked 25 bps to 5.5%. Consensus rate-hike expectations rose to 75-100 bps from 50 bps. Why it matters: Jefferies said the stance change can lift earnings for larger private banks, PSU banks, and HFCs, while posing a slight risk to smaller private banks, NBFCs, and LIs. It sees possible rate hikes of 75-100 bps.

The RBI raised its repo rate by 25 bps and changed its stance from Neutral to Calibrated Tightening. Jefferies India said it now prefers banking stocks over NBFCs, naming ICICI Bank, SBI, and Axis Bank as top large-cap picks.

Jefferies said the stance change can lift earnings for larger private banks, PSU banks, and HFCs, while posing a slight risk to smaller private banks, NBFCs, and LIs. It sees possible rate hikes of 75-100 bps.