Fourteen bank stocks rose by 2.53% to 7.24% at 9:18 IST on BSE after the Reserve Bank of India on Monday, 7 October 2013, evening announced measures to improve liquidity conditions in the banking system.
Yes Bank (up 7.24%), IndusInd Bank (up 6.59%), Kotak Mahindra Bank (up 4.09%), Axis Bank (up 3.72%), ICICI Bank (up 3.56%), Canara Bank (up 3.33%), Union Bank of India (up 3.15%), Bank of Baroda (up 3.13%), Bank of India (up 3.09%), IDBI Bank (up 3.03%), HDFC Bank (up 2.9%), Punjab National Bank (up 2.79%), Federal Bank (up 2.71%) and State Bank of India (up 2.53%), edged higher.
The S&P BSE Bankex rose 3.08% to 11,829.71. It outperformed the S&P BSE Sensex, which was up 0.82% at 20,058.56.
The S&P BSE Bankex had underperformed the market over the past one month till 7 October 2013, rising 1.26% compared with the Sensex's 3.24% rise. The index had, however, underperformed the market in past one quarter, falling 11.98% as against Sensex's 2.05% rise.
The Reserve Bank of India (RBI) announced a reduction in the marginal standing facility (MSF) rate by 50 basis points to 9% with immediate effect. The central bank has also decided to provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of net demand and time liabilities (NDTL) of the banking system through variable rate auctions on every Friday beginning from 11 October 2013. The notified amount and tenor of the term repo auctions will be announced prior to the dates of the auctions, the RBI said in a statement.
Starting with the Mid-Quarter Review of September 2013, the RBI began a calibrated withdrawal of exceptional measures undertaken since July 2013. This was done with a view to normalising liquidity conditions, the RBI said. RBI said that open market purchase operations of Rs 9974 crore were conducted on Monday, 7 October 2013, to inject liquidity into the banking system.
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