Shares in state-run banks outperform pvt lenders after RBI decision

Reuters Market Eye - Shares in state-owned banks outperform their private sector counterparts on expectations of higher bond portfolio gains after the central bank unexpectedly kept the country's policy interest rate on hold.

State-run banks have higher government bonds in their books compared to their private counterparts, analysts tracking the sector said.

The Reserve Bank of India had been widely expected to raise the repo rate on Wednesday, after lifting the country's main lending rate by 25 basis points each at its previous reviews in September and October.

Canara Bank Ltd gains 4.9 percent and Bank of India Ltd is up 4.6 percent. ICICI Bank Ltd gains 1.4 percent and HDFC Bank Ltd is up 1 percent.

Also, banking shares are heading towards their biggest single-day percentage gain since December 9.

However, the central bank warned it would remain vigilant on inflation and that it would be ready to act even in between policy reviews should headline or core inflation not ease as expected, albeit noting it would do so in a "calibrated" manner.

(Reporting by Abhishek Vishnoi)