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ICICI Bank, Axis Bank, BOB rally ahead of RBI policy meet

Rate sensitive sector stocks such as banking & realty have rallied in opening trades on Monday ahead of the Reserve Bank of India policy review on July 31.

ET Online|
Jul 30, 2012, 04.24 PM IST
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Banking, realty stocks rally ahead of RBI policy meet
Banking, realty stocks rally ahead of RBI policy meet
NEW DELHI: Rate sensitive sector stocks such as banking and realty rallied on Monday ahead of the Reserve Bank of India (RBI) policy review on July 31. All eyes are now on central banks across the world this week including the RBI.

On Tuesday, the Reserve Bank of India will hold its monetary policy review meeting, followed by the US Fed's open market committee meeting on Wednesday and the European Central Bank's rate and monetary policy meeting on Thursday.

“Market participants are divided in their expectations of a rate cut by the RBI. The dominant view is that persistent high inflation and a rising fiscal deficit will hold back RBI from cutting rates,” ET reported.

"Domestically, interest rate-sensitive counters are likely to be in focus in this week as the Reserve Bank of India declares its monetary policy on Tuesday," Shardul Kulkarni, Senior Technical Analyst, Angel Broking, SAID.

"We expect no change in the repo and reverse repo rates considering inflation continues to remain high. The fiscal situation is still a point of concern and the government is expected to take some action on that front," added Kulkarni.

Bankers expect the RBI to the cut cash reserve ratio (CRR) by upto 50 bps in its policy review even as a severe drought is staring at the country which could fuel a price rise.

“Bankers are looking at a reduction in the CRR and not a cut in the key lending rates - given the piquant macroeconomic conditions and the stubborn price index,” PTI reported.

The BSE Banking index closed 2.6 percent higher led by gains in ICICI Bank Ltd which ended 3.8 percent higher at Rs 964.30, Axis Bank advanced 4.3 per cent to Rs 1041 and Bank of Baroda was up 3.5 per cent to Rs 672.60.

The BSE Realty Index closed 3.1 per cent higher led by gains in Sobha Developers which ended 4.4 percent higher at Rs 350.65, Indiabulls Real Estate was up 6.2 per cent to Rs 56.80, Unitech Ltd advanced 3.89 percent to Rs 21.35 and DLF Ltd gained 3.4 per cent to Rs 201.25.

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