Banking shares are trading lower by up to 3% erasing their entire early morning gain after the Reserve Bank of India (RBI) has increased repo rate by 25 bps from 7.75% to 8%. Cash Reserve Ratio (CRR) has been left unchanged at 4%.
Repo rate is the rate of interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements. CRR is the amount of funds that the banks have to keep with the RBI.
Indusind Bank, Bank of India, ICICI Bank, Punjab National Bank and Canara Bank are down more than 2% each, while Axis Bank, YES Bank, HDFC Bank and Kotak Mahindra Bank are trading lower by 1-2% on the National Stock Exchange (NSE).
The NSE banking share index Bank Nifty was down 1.7% at 10,333 points compared to 0.68% fall in benchmark CNX Nifty at 1114 hours. CNX Nifty has dipped 3.5% from intra-day high of 10,708 in early morning deals.
Meanwhile, the Central Bank said, “If the disinflationary process evolves according to this baseline projection, further policy tightening in the near term is not anticipated at this juncture. In fact, if inflation eases at a pace that is faster than we currently anticipate, and that reduction is expected to be sustained, the Reserve Bank will have room to become more accommodative”.
Repo rate is the rate of interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements. CRR is the amount of funds that the banks have to keep with the RBI.
Indusind Bank, Bank of India, ICICI Bank, Punjab National Bank and Canara Bank are down more than 2% each, while Axis Bank, YES Bank, HDFC Bank and Kotak Mahindra Bank are trading lower by 1-2% on the National Stock Exchange (NSE).
The NSE banking share index Bank Nifty was down 1.7% at 10,333 points compared to 0.68% fall in benchmark CNX Nifty at 1114 hours. CNX Nifty has dipped 3.5% from intra-day high of 10,708 in early morning deals.
Meanwhile, the Central Bank said, “If the disinflationary process evolves according to this baseline projection, further policy tightening in the near term is not anticipated at this juncture. In fact, if inflation eases at a pace that is faster than we currently anticipate, and that reduction is expected to be sustained, the Reserve Bank will have room to become more accommodative”.
