PremiumMUMBAI : Banking stocks were trading mixed after the Reserve Bank of India (RBI) kept the policy repo rate unchanged at 4% while maintaining its accommodative stance after the conclusion of the Monetary Policy Committee (MPC) meeting on Friday.
At 12:30 pm, Nifty Bank index was down 0.67% at 35,409.65. The Nifty 50 index was down 0.046% at 15,683.15.
Among private sector banks, stocks of Yes Bank and IndusInd Bank advanced 1.11% and 0.57% respectively, while those of Bandhan Bank, IDFC First Bank, and HDFC Bank fell 1.83%, 1.32%, and 0.95%, in that order. The other stocks that declined were Federal Bank (by 0.91%), RBL Bank (by 0.87%), ICICI Bank (by 0.83%), Axis Bank (by 0.74%), and Kotak Mahindra Bank (by 0.25%).
Among public sector banks, stocks of Bank of Maharashtra, Indian Overseas Bank, Central Bank of India, Bank of India , edged higher at 10.89%, 9.43%, and 3.12%, respectively, while stocks of Punjab National Bank, Canara Bank, and State Bank of India were down 1.14%, 0.83% and 0.82%, respectively.
RBI's MPC kept the benchmark interest rate unchanged amid covid-19 uncertainty. Repo rate (lending rate) will continue at 4% and reverse repo rate (RBI's borrowing rate) at 3.35%. The central bank has maintained an accommodative stance.
“The MPC expectedly stayed on hold and emphasized its commitment to keeping policy accommodative and maintaining ample liquidity as long as necessary. The bigger move was with regard to yield management as the RBI stressed on smooth liquidity management and orderly G-sec borrowings, with a more vocal and defined G-SAP. Of the residual ₹40,000 crore G-SAP 1.0, around ₹10,000 crore will be allocated to SDLs, while the G-SAP 2.0 amount will be higher at ₹1.2trillion for Q2FY21," said Madhavi Arora, lead economist, Emkay Global Financial Services. G-secs are government securities, G-SAP is government securities acquisition plan, and SDL stands for state development loans.
"This would further ensure lower sovereign risk premia ahead, amid an elevated borrowing calendar this year. On other liquidity and regulatory front, Resolution 2.0 expanded to wider range of borrowers, on-tap liquidity of ₹15,000 crore for 3 years at repo rate to provide loans to contact services and new liquidity worth ₹16,000 crore to SIBDI (Small Industries Development Bank of India) for on-lending for MSMEs (micro, small, and medium enterprises) and increase in the restructuring eligibility limits for MSMEs" she added.
RBI has projected Consumer Price Inflation (CPI) at 5.1% for FY2022—5.2% in Q1, 5.4% in Q2, 4.7% in Q3 and 5.3% in Q4. It has projected GDP growth at 9.5% for the fiscal.
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