Bankex shines as RBI moves in line with expectations

Mumbai, July 25 | Updated: Jul 26 2006, 05:30am hrs
Bank stocks stole the show on Tuesday as the markets reacted positively to the quarterly review of the credit policy. While the benchmark Sensex gained less than 2% on Tuesday, the BSE Bankex was up by more than 4%, or 181 points. All the banking stocks registered impressive gains with ICICI Bank and HDFC Bank featuring among the top gainers in the Sensex pack.

Earlier in the day, the Reserve Bank of India (RBI) hiked the key benchmark rates repo and reverse repo by 25 basis points each. No change was made in the bank rate. The central bank also kept the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) unchanged.

Market experts opine that the policy review has been in line with market expectations, which is further proven by the fact that the bank stocks have been on an upswing in the recent past.

Shriram Iyer, head (research), Edelweiss Capital, said, The RBIs decision not to touch bank rate and hike repo and reverse repo rate is in line with the market conditions both domestic and global. This has already been factored into the banks stock prices and thats precisely what we saw on Monday and Tuesday, too. While two of the biggest private players ICICI Bank and HDFC Bank gained in the range of 4-6% each, SBI, the country's largest bank, gained nearly 1% to end the day at Rs 746.90.

However, the gains were not limited to the bigger players only. The BSE Bankex having 18 constituents, ended the day with significant gains. UTI Bank, PNB, OBC, Kotak Bank, Karnataka Bank, Indian Overseas Bank, Bank of India, Allahabad Bank and Andhra Bank were some of the other banking stocks that gained ground.