The Hindu Business Line : Banks sail on broad rally

Banking stocks, though closed higher today in tandem with the broad market rally, lagged the main benchmarks. While the Sensex and the Nifty surged five per cent, the BSEBankex gained just 2.74 per cent, the least among the indices.

In the backdrop of RBI having raised its reverse repo and repo rates, market participants said, banks with exposure on the AFS (available for sale) side, (for instance IOB, OBC) could see their profits impacted. Some banks may face pressure on margins unless they can pass on rate hikes to their customers. While analysts were confident that heavyweights such as HDFC, ICICI and PNB are unlikely to be impacted, banks with low CASA (current account saving account) ratio (Dena Bank, UCO Bank) may face some issues. However, IOB ended 11.19 per cent up to close at Rs 75.05 on the BSE while OBC ended at Rs 169.75 up 9.52 per cent. Dena Bank closed at Rs 28.75, up 12.30 per cent, while UCO Bank ended at Rs 18.70, up 4.18 per cent, on the BSE.

Deeptha Rajkumar

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