Shares in state-controlled banks with higher available-for-sale bonds gain.
Punjab National Bank up 3 pct, Allahabad Bank gains 2.6 pct.
Indian Overseas Bank is up 0.8 pct, Bank of India rises 1 pct, Canara Bank up 0.7 pct.
Read RBI Governor Raghuram Rajan’s Full Report: Fifth Bi-Monthly Monetary Policy Statement, 2014-15
ANALYSTS’ COMMENTARY: ‘Change in stance by Raghuram Rajan’s RBI very heartening’
RBI POLICY REVIEW: HIGHLIGHTS
Falling bond yields may lead to treasury gains on bond portfolios – Traders.
State-run banks are the biggest buyers of government debt in markets, so higher bond prices can boost their earnings.
The benchmark 10-year bond yield was at 8.01 pct at 0641 GMT, after earlier rising to as much as 8.11 pct.
The Reserve Bank of India (RBI) held interest rates steady, but said it could cut interest rates by early next year.
The 10-year bond yield has fallen 75 bps in 2014 so far, as of Monday’s close.