Shares of rate sensitive mainly banking stocks have tumbled more than 5% each from intra-day highs after the Reserve Bank of India (RBI) kept key policy rates and cash reserve ratio unchanged in its mid-quarter monetary policy review today.
The central bank has kept the cash reserve ratio (CRR) or the portion of cash banks are required to keep with RBI at 4.75% of their net demand and time liabilities; and the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8%. Repo is the rate of interest at which banks borrow money from RBI.
“Future actions will depend on a continuing assessment of external and domestic developments that contribute to lowering inflation risks,” RBI said in a policy review.
“Both headline and retail inflation rates are rising, which have a bearing on inflation expectations. Recognizing that the global situation is turbulent, the Reserve Bank stands ready to use all available instruments and measures to respond rapidly and appropriately to any adverse developments,” the central bank added.
Among the individual stocks State Bank of India (SBI) has dipped almost 5% to Rs 2,110, falling 5.5% from intra-day’s high of Rs 2,232 on the Bombay Stock Exchange (BSE). Oriental Bank of Commerce, ICICI Bank, UCO Bank, Bank of India, IDBI Bank and HDFC Bank trading lower by 3% each, has fallen over 5% from day’s high levels.
The banking share index Bankex, the largest loser among sectoral indices is down 2% or 342 points at 11,245 points, declining 494 points from day’s high of 11,739 at 1105 hours, compared to less than 1% fall in the benchmark index Sensex.