Banks rise after RBI delivers 50 bps repo rate cut

SBI, ICICI Bank up 1% after the rate cut

Banking shares rose after the Reserve Bank of India (RBI) cut the repo rate by a higher-than-expected 50 basis points, while keeping the cash reserve ratio (CRR) unchanged.

NSE Bank Nifty, the main banking index, reversed losses and rose as much as 1.81% after the rate decision. It was trading 0.78% down ahead of the announcement. "Fifty basis points cut is above expectations and should help in improving net interest margins, and reduce NPA possibilities at banks," said Sudip Bandyopadhyay, MD & CEO, Destimoney Securities Pvt Ltd.

"Open market operations and CRR cuts would definitely be there, but outside the purview of policy. RBI wants to delink liquidity enhancement measures from the policy," Bandyopadhyay added.

 

Shares in State Bank of India were trading up 1.12% at Rs 2,288.95. Private lender ICICI Bank was up 0.9% at Rs 882.