Banking stocks are in the limelight as the Reserve Bank of India slashed the key lending rates by 25 basis points to 6.25% from 6.5%. The RBI Governor added that “Bank liquidity buffers are sufficient. Though the net interest margin (NIM) moderated, return on assets (RoA) and return on equity (RoE) are robust. The system-level parameters for NBFCs too are healthy” He urged banks to actively trade among themselves.
However, all these measures did not result in any significant uptick in bank stocks. The Nifty Bank declined over 250 points or 0.51% to 50,127.
The three major losers in the Nifty 50 were from the financial sector: SBI, Axis Bank, and Bajaj Finance. ICICI Bank was the biggest contributor to the drop, down 1.1% to a low of Rs 1,258.35 intraday.
The key indices, Nifty 50 and Sensex, both slipped to red. The Nifty 50 was down 45 points, or 0.19%, at 23,558 while the Sensex dropped 158.57 points, or 0.20%, to trade at 77,899.59.
Not just banks, the Nifty Financial Services Index also fell 0.55% to 23,530.40. Most of the constituents of the index dipped to red.
“RBI has also provided comfort on the liquidity scenario albeit no new steps have been announced. It has also clarified that the intervention in the forex market will be measured based on excessive and disruptive moves in the currency,” said Suman Chowdhury, Executive Director & Chief Economist at Acuité Ratings & Research. “We believe that RBI MPC has initiated a shallow rate cycle with low visibility and limited clarity on future rate cuts.”
The lender of last resort estimated the GDP growth for FY26 at 6.7%, compared to 6.4% for FY25. RBI MPC has kept the inflation trajectory with a forecast of 4.2% for FY26, a 60 bps reduction from the estimate of 4.8% for FY25.
“Regarding currency movement, the new Governor made it clear that it’s decided by the market force and no specific band is targeted, which also means the RBI may not intervene in the currency market as expected. The rupee may stay volatile and the undertone is bullish in the USDINR pair. Going ahead, 88.00 is a resistance for the short term,” said Jigar Trivedi,
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