Bank shares rose across the board at 9:20 IST on BSE after the central bank in a surprise move cut interest rates today, 15 January 2015.
Among private sector banks, ICICI Bank (up 4.03%), Yes Bank (up 3.70%), ING Vysya Bank (up 3.17%), Axis Bank (up 2.99%), City Union Bank (up 2.74%), IndusInd Bank (up 2.58%), Federal Bank (up 2.57%), Kotak Mahindra Bank (up 2.57%) and HDFC Bank (up 1.12%), edged higher.
Among public sector banks, Allahabad Bank (up 4.93%), State Bank of India (up 4.51%), Punjab and Sind Bank (up 4.22%), Union Bank of India (up 3.95%), Andhra Bank (up 3.89%), Vijaya Bank (up 3.88%), Syndicate Bank (up 3.87%), Canara Bank (up 3.53%), Bank of India (up 3.40%), Dena Bank (up 3.38%), Punjab National Bank (up 3.35%), United Bank of India (up 3.33%), UCO Bank (up 3.12%), Bank of Baroda (up 3.10%), Indian Bank (up 3.09%), IDBI Bank (up 2.93%), Central Bank (up 2.64%), Bank of Maharashtra (up 2.42%) and Corporation Bank (up 2.25%), edged higher.
The S&P BSE Bankex was up 2.76% at 21,910.72. It outperformed the Sensex, which was up 1.53% at 27,764.11.
The Reserve Bank of India cut interest rates before trading hours today, 15 January 2015, by 25 basis points in a surprise inter-meeting cut, yielding to growing signs of slowing inflation and a flagging recovery.
RBI reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 8% to 7.75% with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 6.75%, and the marginal standing facility (MSF) rate and the Bank Rate to 8.75% with immediate effect.
It kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4% of net demand and time liabilities (NDTL).
In a statement, the RBI cited lower-than-expected inflation, weak crude prices and weak demand, as well as the government's commitment to sticking to a fiscal deficit target. These developments have provided headroom for a shift in the monetary policy stance, it said.
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