Bank stocks rise as investors cheer 35 bps repo rate hike, PSU banks win big

Bank stocks gained momentum after the RBI raised repo rates by 35 basis points in line with expectations on Wednesday. Bank shares PSU were the big winners, while private banks also posted notable gains. RBI raised the repo rate to 6.25% — to the highest level since August 2018. So far in fiscal year 2023, the RBI has raised the policy repo rate to control excess CPI inflation. tolerance for the tenth consecutive month.

At around 10:10 a.m., BSE Bankex was trading at 49,326.43 136 points or 0.22% higher. Nifty Bank rose 105.95 points, or 0.25%, to trade at 43,244.50. On the other hand, Nifty Bank PSU up nearly 1%, while the Nifty Private Bank index was up slightly.

According to Nifty Bank PSU, shares of Central Bank of India rose 7.4% to trade at $28.30 per person, while UCO Bank raises 5.20% to perform at $22.25 each. Earlier in the day, the Central Bank of India and UCO Bank hit a new 52-week high of $28.80 per person and $22.65 each respectively.

Furthermore, Overseas Bank of India was up more than 4%, while Maharashtra Bank was up at least 2.5% and Bank of India was up more than 2%. These stocks are trading near their 1-year highs.

There was a slight increase seen in stocks such as PNB, Bank of India, Bank of Canara, Bank of Baroda and SBI. However, Punjab & Sind Bank was the top discount bank with a drop of more than 1%, followed by Union Bank of India which traded flat.

Among private bankers, ICICI Bank rose nearly one percent, while stocks such as Bandhan Bank, IDFC First Bank, City Union Bank, Axis Bank, Federal Bank and HDFC Bank increase higher.

RBI quantitative easing raised repo rate as CPI inflation showed signs of slowing as economic index fell below 7% mark in October.

The first repo rate hike for fiscal year 2023 was in May at 40 basis points, followed by three consecutive 50 basis point hikes between June and October 2022. Now, As expected, the RBI raised the repo rate by 35 basis points for December policy.

So far in 2023, repo rates have increased by 225 basis points in repo rates — to 6.25%.

The latest inflation data showed that CPI fell to 6.77% in October due to slower food price increases and strong base effect. This is much better than the 5-month high of 7.41% in September 2022.

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