Banking stocks edged higher on the Bombay Stock Exchange today on fresh round of investments following the less-than-expected hike in policy rates by the Reserve Bank.
State Bank of India, the nation's largest lender, was up 2.19 per cent to Rs 2,076.20 in the afternoon trade, while the country's top private lender ICICI Bank surged 2.04 per cent to Rs 938.65. HDFC Bank rose 0.87 per cent to Rs 1,952.
Analysts said that markets reacted positively as the hike in rates by RBI was lower than expectations. "There were fears that hike in rates would be higher than announced. Dalal Street felt relieved and rate sensitive stocks have gone up after the announcement," Bonanza Portfolio Assistant VP Avinash Gupta said.
The RBI today hiked short-term lending and borrowing rates and the portion of money banks deposit with it by 25 basis points each, a move aimed at containing inflation without hurting growth. Punjab National Bank was higher by 1.07 per cent, whereas Bank of India zoomed 2.30 per cent.
Other major gainers on the BSE include, Allahabad Bank (2.35 per cent), Karnataka Bank (2.15 per cent), Indusind Bank (1.76 per cent) and HDFC (0.45 per cent). Stock market benchmark shot up 150 points in afternoon trade and was quoting at 17,551.02.
The apex bank hiked the repo and the reverse repo (overnightlending and borrowing rates) to 5.25 per cent and 3.75 per cent respectively, while the Cash Reserve Ratio, or the portion banks park with the RBI, was increased to 6 per cent.
