Banking stocks vault, Bankex up 5% in four days

Banking stocks are on a roll on the bourses with most of them gaining in the range of 1-5%, on reports that the cabinet has cleared recapitalization plan of the PSU banks.

Oriental Bank of Commerce, Canara Bank, Karnataka Bank and Bank of India have gain more than 3% each today. Banking giants - ICICI Bank, SBI and HDFC Bank are up in the range of 1-2% each. The BSE Bankex is the largest gainer, up 1.3% so far, as compared to less than 1% gain the benchmark index Sensex.

The government proposal to inject around Rs 15,000 crore fresh capital into state-run banks has been approved by the cabinet.

The BSE Bankex has appreciated more than 5% in last four trading days, as compared to 1% rise in the Sensex, after less than expected hike in policy rates by the Reserve Bank of India (RBI) on April 20.

The RBI 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.

The apex bank hiked the repo and the reverse repo (overnight lending and borrowing rates) to 5.25% and 3.75% respectively, while the Cash Reserve Ratio, or the portion banks park with the RBI, was increased to 6%.