Shares of 14 banks rose by 0.23% to 2.39% at 11:15 IST on BSE after the Reserve Bank of India raised key interest rates by 25 basis points at the second quarter policy review today, 29 October 2013.
Axis Bank (up 2.39%), Union Bank of India (up 2.36%), ICICI Bank (up 2.31%), Bank of Baroda (up 2.22%), Yes Bank (up 2.20%), Federal Bank (up 2.16%), IndusInd Bank (up 2.04%), Punjab National Bank (up 1.72%), Canara Bank (up 1.60%), IDBI Bank (up 1.43%), State Bank of India (up 0.58%), Bank of India (up 0.48%), Kotak Mahindra Bank (up 0.30%) and HDFC Bank (up 0.23%), edged higher.
The S&P BSE Bankex was up 0.81% at 12,395.96. It outperformed the S&P BSE Sensex, which was up 0.15% at 20,601.14.
The Reserve Bank of India (RBI) increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5% to 7.75% with immediate effect. The central bank kept cash reserve ratio (CRR) unchanged at 4% of net demand and time liability (NDTL).
RBI reduced the marginal standing facility (MSF) rate by 25 basis points from 9% to 8.75% with immediate effect. It, however, increased the liquidity provided through term repos of 7-day and 14-day tenor from 0.25% of NDTL of the banking system to 0.5% with immediate effect.
RBI stated that since its mid-quarter review in September 2013, the outlook for global growth has improved modestly, with fiscal concerns abating in the US and lead indicators of activity firming up in the Euro area and the UK.
In emerging and developing economies, the prospect of delay in the taper of the Federal Reserve's bond purchases has brought calm to financial markets, and capital flows have resumed. Nevertheless, headwinds to growth from domestic constraints continue to pose downside risks, and vulnerabilities to sudden shifts in the external environment remain, RBI said.
RBI said that the policy stance and measures in the latest review are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth. These will help strengthen the environment for growth by fostering macroeconomic and financial stability. The RBI said it will closely monitor inflation risk while being mindful of the evolving growth dynamics.
Powered by Capital Market - Live News
