Banks lead market rebound after RBI governor's remarks lift sentiment

Policy worries fade; clarity on foreign currency deposit lifts lenders

Indian equity benchmarks rose on Wednesday, supported by gains in banking stocks after the Reserve Bank of India (RBI) governor’s remarks eased concerns over interest rate hikes and the central bank’s clarification allowing lenders to extend loans against foreign currency deposits. 

Easing crude oil prices, which have almost reached pre-war levels, further lifted sentiment and eased jitters about the impact of a weak monsoon. The benchmark Sensex ended the session at 78,991, a gain of 791 points, or 1.04 per cent. The Nifty, meanwhile, ended the session at 24,022, a gain of 198 points, or 0.8 per cent. The total market capitalisation of BSE-listed firms stood at ₹476 trillion, up by ₹1.3 trillion. 

 

RBI Governor Sanjay Malhotra assuaged domestic rate hike concerns, saying it was “premature” to discuss the policy outlook given ongoing geopolitical uncertainties. Malhotra further said the monetary policy committee was keeping a close eye on both monsoon and crude prices. Moreover, the central bank’s clarification on Tuesday, allowing banks to lend against foreign currency deposits by non-resident Indians, led to gains in banking stocks. The Nifty Bank index rose 1.7 per cent. Banking stocks contributed the most to index gains, with HDFC Bank leading the gains with its higher index weight, rising 2.4 per cent, while ICICI Bank gained 2.7 per cent. 

With easing geopolitical tensions and the subsequent fall in oil prices, investor focus will shift to the ongoing monsoon and its impact on demand. 

“Indian equities are expected to regain their positive momentum, supported by renewed buying interest and lower energy prices. The southwest monsoon has resumed its advance across the country, improving investor sentiment. Any further progress on geopolitical and trade-related fronts, coupled with stable energy prices and sustained foreign inflows, could provide additional support to domestic equities,” said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services. 

Market breadth was mixed, with 2,168 stocks advancing and 2,101 declining.  “While the clarity in the foreign currency non-resident (bank) deposit swap scheme provided momentum to banking stocks, IT stocks gained on reinforcing commentary that Indian vendors remain indispensable implementation partners for enterprise-wide mid- and back-office artificial intelligence adoption,” said Vinod Nair, head of research at Geojit Investments. 

 

Brent at its lowest since before Iran war started 

Brent crude prices fell more than $3 on Wednesday to their lowest level since before the start of the Iran ⁠waras signs emerged that more oil tankers are set to move out of the Strait of Hormuz. 

Brent crude futures were down $3.32 or 4.3 per cent, at $73.76 a barrel by 1327 GMT. Brent touched a low of $73.60, its weakest level since February 27, the day ​before US-Israeli strikes on Iran. WTI fell ​as low as $70.91, the lowest since March 3. 

“The ​market is pricing in the broader scenario of Iranian oil re-entering the global market and the Strait of Hormuz normalising,” said Tim Waterer, chief market analyst at KCM Trade. “Markets are currently assigning too much confidence to a favourable outcome without discounting the risks,” said Mark Malek, CIO at Siebert Financial.

Gold touches over 7-month low 

Gold prices ⁠fell to a more than seven-month low on Wednesday, after briefly slipping below the key $4,000-per-ounce level, under pressure from a firmer US dollar and growing expectations of interest rate hikes. Spot gold fell 2.1 per cent ‌to $4,021.99 an ounce as of 1405 GMT, after ​hitting its lowest level since November ​2025. 

Meanwhile, gold prices declined by ₹1,200 to ₹1.48 lakh per 10 grams in the national capital on Wednesday, and sil­ver dropped by ₹4,000. The yellow metal of 99.9 per cent purity decreased by ₹1,200 to ₹1,48,100 per 10 grams. [Agencies]