Shares of PSU banks jumped up to 13% on Wednesday ahead of Thursday’s monetary policy meeting by the Reserve Bank of India (RBI) where the Central Bank is expected to strike a dovish note. Moreover, bond yields drifted lower on Wednesday which led to heightened investor enthusiasm.
The top gainer in the PSU bank pack was Indian Overseas Bank (IOB) which shot up 13% to its fresh 52-week high of Rs 76.40 on the NSE. It was followed by Uco Bank which was 11% up and tested a fresh 52-week peak of Rs 65.70. Canara Bank was the next top gainer which also hit its 52-week high of Rs 550.50 jumping nearly 6% on the intraday basis. The company today announced a proposal of a stock split, the decision on which is likely to be taken on February 26, when its Board of Directors will meet.
Meanwhile, the Bank of India, Bank of Maharashtra, State Bank of India (SBI), Punjab National Bank (PNB), Central Bank of India, Union Bank of India and Punjab & Sind Bank gained up to 5%.
In the 12-stock index, there were only two losers in the form of Bank of Baroda (BOB) and Indian Bank which fell up to 1%. Nifty PSU Bank also hit a fresh 52-week high of 6,738.70, gaining 2.32% around 11:30 am. It was the top-performing index today.
Indian government bond yields drifted lower in early trades on Wednesday, as sentiment remained positive a day ahead of the Reserve Bank of India’s last monetary policy decision for the current financial year.
India’s benchmark 10-year yield was at 7.0672% as of 10 am following its previous close of 7.0904%, Reuters reported.
The central bank may strike a dovish tone, post a healthy budget and largely comfortable global narrative, but it will fall short of any stance change and there may be no material change in the assessment of macro variables, Emkay Global said.
Traders will also keenly await guidance on the banking system liquidity, especially after the central bank’s aggressive withdrawal of cash from the system so far this month.
The RBI conducted two separate overnight variable rate reverse repo auctions on Tuesday and will conduct a similar operation later in the day, this report said.
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