Banking stocks rise as investors cheer 35 bps repo rate hike, PSU banks big winners

At around 10.10 am, BSE Bankex is trading at 49,326.43 higher by 136 points or 0.22%. Nifty Bank surged by 105.95 points or 0.25% to trade at 43,244.50. On the other hand, Nifty PSU Bank rallied to nearly 1%, while a marginal upside was seen in the Nifty Private Bank index.

Under Nifty PSU Bank, Central Bank of India stock climbed by 7.4% to trade at ₹28.30 apiece, while UCO Bank jumped by 5.20% to perform at ₹22.25 apiece. Earlier, in the day, the Central Bank of India and UCO Bank touched a new 52-week high of ₹28.80 apiece and ₹22.65 apiece respectively.

Further, the Indian Overseas Bank jumped over 4%, while the Bank of Maharashtra gained by at least 2.5%, and the Bank of India climbed by over 2%. These stocks are trading near their 1-year highs.

There was a marginal upside seen in stocks like PNB, Indian Bank, Canara Bank, Bank of Baroda, and SBI. However, Punjab & Sind Bank was the top bear with a downside of over 1% followed by Union Bank of India which traded flat.

Among private bankers, ICICI Bank gained nearly a percent, while stocks like Bandhan Bank, IDFC First Bank, City Union Bank, Axis Bank, Federal Bank, and HDFC Bank edged higher.

RBI eased its repo rate hike quantum as CPI inflation showed signs of a slowdown as the economic indicator came below the 7% mark in October.

The first hike for FY23 was in May by 40 basis points in repo rate followed by three straight 50 basis points hikes between June to October 2022. Now, on an expected line, RBI hiked the repo rate by 35 basis points for the December policy.

So far in FY23, the repo rate is hiked by 225 basis points in repo rate — taking it to 6.25%.

The latest inflation data showed that the CPI eased to 6.77% in October on the back of slower rises in food prices and a strong base effect. This is far better than a five-month high of 7.41% in September 2022.