PSU banks turn positive after RBI policy

Nifty PSU Bank index was up 0.80% as compared to 0.27% decline in the Nifty 50 index at 11:45 AM.

Banking shares mainly public sector undertakings (PSU) were trading in green and erasing their losses after the Reserve Bank of India (RBI) kept its key policy rate unchanged in its sixth bi-monthly monetary policy review.

State Bank of India (SBI), Union Bank of India, Bank of Baroda, Punjab National Bank, Andhra Bank, Oriental Bank of Commerce, Allahabad Bank, IDBI Bank, Canara Bank and Bank of India were trading in green by up to 3% on the National Stock Exchange (NSE).

At 11:45 AM, Nifty PSU Bank index, the largest gainer among sectoral indices was up 0.80% as compared to 0.27% decline in the Nifty 50 index.  The PSU bank index hit an intra-day high of 2,246 and recovered 2.7% from intra-day low of 2,187.

SBI was trading at Rs 173, recovering 1.8% from its 52-week low of Rs 170 touched in intra-day trade on the NSE.

The RBI said that it continues to be accommodative even as it leaves the policy rate unchanged in this review, while awaiting further data on the development of inflation.

Structural reforms in the forthcoming Union Budget that boost growth while controlling spending will create more space for monetary policy to support growth, while also ensuring that inflation remains on the projected path of 5% by the end of 2016-17.

The Reserve Bank’s industrial outlook survey suggests a modest expansion of activity likely in Q4.