Bank stocks gain up to 9% ahead of RBI policy

Bank stocks were in demand today, surging up to 9 per cent, ahead of RBI's policy review meeting tomorrow and on hopes of an interest rate cut.

Leading the pack of gainers was Indian Bank which zoomed 8.92 per cent, followed by Canara Bank, surging 5.56 per cent, Bank of Baroda (4.09 per cent) and SBI (3.94 per cent) on the BSE.

Among others, ICICI Bank gained 3.40 per cent, PNB was up 2.78 per cent, AXIS Bank (0.48 per cent) and Yes Bank (0.36 per cent).

Similarly, Bank of India climbed 2.51 per cent, Allahabad Bank rose 1.52 per cent, Andhra Bank jumped 1.96 per cent and Bank of Maharashtra went up 1.04 per cent.

"Banking stocks led the rally on the benchmark indices on hopes of a rate cut by the RBI in the policy tomorrow," said Gaurav Jain, Director at Hem Securities.

On the other hand, HDFC Bank was down 1.49 per cent, Kotak Mahindra Bank lost 0.80 per cent and Federal Bank (0.44 per cent).

The BSE banking index ended the day with 0.99 per cent gains at 21,711.73.

Meanwhile, pressure is mounting on RBI to cut interest rate in its third monetary policy review of this fiscal tomorrow. Experts are however of the view that retail inflation may hold it back from doing so.

RBI mostly tracks the consumer price inflation for its monetary policy decision.

In its last review on June 2, RBI cut repo rate 0.25 per cent for the third time this year.

Bank stocks also rose after the government announced plans to infuse fresh capital into state-run lenders.

In the broader market, the 30-share Sensex ended the day 72.50 points higher at 28,187.06.

Key benchmark indices in France and Germany were up 0.2 per cent to 0.35 per cent while UK's FTSE 100 was off 0.13 per cent.

In Greece, the Athex Composite index tumbled after trading on the Greece stock market resumed today after a five-week shutdown. The Athex Composite was currently off 18.5 per cent at 649.38.

Asian stocks ended lower amid signs of a deepening slowdown in China's economy, the world's second-largest economy. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan fell by 0.18 per cent to 1.11 per cent.

Pramit Brahmbhatt, Veracity Group CEO said," Local equities continued to trade bullish & closed on a higher side for the fourth day in a row. Indices gained mainly with the help of the blue chip co. which looked attractive after a recent fall. FIIs also looked confident and were the net buyers of shares worth over Rs 2298 crores in last month.

Though for the day the local markets were seen cautious ahead of the RBI credit policy due for tomorrow which would show the road ahead to the investors.

In the domestic market, 18 stocks out of 30-share sensex pack ended higher while 12 others finished lower.

Major gainers were SBI (3.94 per cent), ICICI bank (3.40 per cent), Maruti (2.29 per cent), Dr Reddy's Lab (2.00 per cent), BHEL (1.58 per cent), ITC (1.56 per cent), Tata Motors (0.99 per cent) and Sun Pharma (0.95 per cent).

However, VEDL fell by 2.50 per cent, M&M 2.04 per cent, Coal India 1.96 per cent, Lupin 1.93 per cent, HDFC Bank 1.49 per cent, HDFC 1.29 per cent, HUL 1.24 per cent and Bajaj Auto 0.72 per cent.

Among the S&P BSE sectoral indices, Consumer Durable rose by 1.37 per cent followed Bankex 0.99 per cent, Auto 0.73 per cent and Power 0.73 per cent while Metal fell by 1.08 per cent and IT 0.53 per cent.

The market breadth remained higher as 1,797 stocks ended higher, 1,129 close lower while 107 ruled steady. Total turnover moved down to Rs 3,727.57 crore from Rs 3,927.59 crore on last Friday