Indian equity markets are in wait-and-watch mode with a positive bias as the RBI Governor Shaktikanta Das cut the cash reserve ratio by 50 basis points to 4% from 4.5% earlier, effective from the current fortnight, December 14. The Bank Nifty gave a thumbs up to the RBI decision and rebounded over 600 points from intra-day lows. Banks have been upbeat yesterday too in anticipation of a CRR cut.
“The CRR reduction of 50 bps is done, to be reduced in 2 tranches of 25 bps. It will infuse about 1.06 L crore liquidity, which meets my expectations on project funding for growth. This will be positive on most banks and their MTM profits on treasury bonds portfolio. This is the beginning of the fall in the interest rate cycle. The best is yet to come,” added Deven R Choksey, MD, DRChoksey FinServ.
The Nifty 50 too recovered from intra-day lows and is trading above 24,700. Meanwhile, the Sensex is hovering around 81,700. The Nifty Midcap was trading consistently in the green during the speech. It rose 0.37% to 58,658.
“RBI’s repo rate decision is as per expectation, CRR cut was factored into a certain extent. Bank stocks had risen in trade yesterday on this expectation. All in all, no negative surprise in the RBI Policy and there is a hint of a repo rate cut in February. I expect the markets to consolidate with a positive bias later today,” said Deepak Jasani, Head of Retail Research at HDFC Securities.
Axis Bank, ICICI Bank, State Bank of India, Bank of Baroda, and Canara Bank were the major contributors to the Bank Nifty. While Bajaj Auto, Axis Bank, BPCL, Eicher Motors, and ITC were the top gainers in the Nifty 50.