Banking Sector Welcomes RBI MPC's This Decision, PSU Banks Jump Upto 3%

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Banking Sector Welcomes RBI MPC's This Decision, PSU Banks Jump Upto 3%
Credit: © Reuters.

By Malvika Gurung

Investing.com -- In the June policy outcome on Wednesday, the central bank RBI announced to raise the repo rate by 50 basis points to 4.9%, its second rate hike since an off-cycle surprise hike last month, to tame the soaring inflation.

RBI’s repo rate hike being in line with the Street’s expectations, along with the central bank’s decision to keep CRR unchanged in the policy outcome, helped the domestic market pare morning losses, faring well for rate-sensitive stocks, especially the banking sector.

Most banking stocks reacted positively to the announcement, gaining even though on a marginal basis. Bank of Baroda (NS: BOB ) jumped almost 3% and SBI (NS: SBI ) traded over 2% at the time of writing.

Sectoral indices Nifty Bank and Nifty Financial Services gained 0.6% each, Nifty PSU Bank surged 1.3%, and Nifty Realty jumped 2.1% post-RBI’s policy outcome.

While a repo rate hike of 40-50 bps was predicted by the market, the decision of keeping CRR unchanged (expected to be hiked too) was welcomed by the Street, especially the banking stock enthusiasts, likely boosting the sector’s business, as it would enable Indian banks to have more money for lending and more income through hike in interest rate, stated experts.

Nifty Bank index is currently at the 35,194 level. On breakage of the upper hurdle, which is quite possible after the RBI's decision to keep CRR unchanged, there can be more upside in the Nifty Bank index, stated Sumeet Bagadia of Choice Broking.

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  • JIJO JOHN @JIJO JOHN
    Well said
    Like 0
  • Maya Maya @Maya Maya
    thank you very much
    Like 1

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