The Hindu Business Line : Bank stocks shine as RBI keeps rates unchanged

BANKING stocks moved up as the Reserve Bank of India kept the bank rate and reverse repo rate unchanged in its quarterly monetary policy review announced today.

This was second day in a row that banking sector stocks remained firm.

The interest in bank shares was seen from the rise in BSE Bankex Index by 2.09 per cent - the highest among all the sectoral indices. The BSE Sensex gained 0.63 per cent.

Stocks that witnessed active buying in today's trading include ICICI Bank (up 4.35 per cent at Rs 511.05 on BSE), SBI (up 1.06 per cent at Rs 750.90), Union Bank of India (up 5.90 per cent at Rs 127.45), Bank of India (up 7.27 per cent at Rs 132.80) and UTI Bank (up 5 per cent at Rs 267). Other banks stocks also gained in today's trading.

"We expect stable interest rate scenario in the medium term. Banking stocks rallied on the news of no change in interest rates. We expect the banking stocks to perform well in the coming days," said Mr V.K. Sharma, Head of Research, Anagram Stock Broking.

Analysts said most of them had discounted that the RBI would increase the reverse report rate by 25 basis points. "Since the hike did not come, it was a surprise but good news for banks stocks," said an analyst with a domestic broking firm.

He said this could have happened due to the revaluation of yuan last week.

But analysts cautioned that banking sector stocks have gone up sharply in the last one week and in the last two trading sessions, the BSE Bankex is up more than 6 per cent. "It is better to wait and watch the situation," cautioned an analyst.

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