Bank stocks cheer CRR cut by RBI, gain up to 4%

By PTI Jan 24 2012 , Mumbai

Banking stocks cheered the Reserve Bank of India's move to cut the cash reserve

ratio by half a percentage point with the sectoral index gaining over 3 per cent.

Pursuant to the RBI policy announcement, the BSE banking index was the largest gainer among the sectoral indices.

At 1201 hrs, the Bankex was trading up 335.79 points or 3.07 per cent, compared just 1.43 per cent gain the benchmark index Sensex.

Analysts said this is a good move by the central bank as after this initiative banks may reduce the interest rate to attract borrowers.

ICICI Bank, which has the highest weightage in the 14 stock banking index jumped more than 3 per cent to touch a high of Rs 887. It was later trading at Rs 886, up 3.29 per cent from its previous closing price on BSE.

Banking giant State Bank of India (SBI) climbed over 4.30 per cent to a high of Rs 2,024.10. It was later quoted at Rs 2,014, up 3.78 per cent from its last close on BSE.

Other major movers were HDFC Bank which was trading at Rs 492.50, higher by 1.78 per cent, Axis Bank at Rs 1,023.75, (up 2.71 per cent), Punjab National Bank at Rs 1,005.80 (up 4.75 per cent), Bank of India at Rs 340, (up 6.72 per cent), Kotak Mahindra Bank at Rs 493 (up 3.26 per cent) and IndusInd Bank at Rs 287 (up 1.99 per cent).

RBI today cut CRR, the amount of deposits the banks are required to keep with RBI in cash, to 5.5 per cent from 6 per cent with effect from January 28, releasing Rs 32,000 crore in the system to ease the liquidity problems.

The short-term lending rate (repo) has been kept unchanged at 8.5 per cent.

All the rate sensative sectors -- capital goods, auto and real estate were trading in the green and were the major movers today, which gained 2.72 per cent, 0.90 per cent and 2.26 per cent respectively.

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