Mumbai, April 4: Bank shares emerged the day’s best performers as hopes soared that the monetary policy due at the month-end will prune bank rate by 50 basis points.
Today’s gains built on the euphoria generated by the passage of the Securitisation Bill and growing anticipation of rosier scorecards for the last financial year.
Investors spooked by predictions of bruised infotech balance-sheets in the wake of the global economic slump and the war in Iraq hitched on to banks for solace. “In such a scenario, the sector is a good bet as conditions here look promising,” a broker said.
Buying was brisk and the breadth was impressive, with some banks scaling new 52-week highs. Oriental Bank of Commerce (OBC) was among them, peaking at Rs 83.55. It settled a tad lower at Rs 79.70, but the close still showed a 6.30 per cent increase over its previous finish.
State Bank of India jumped Rs 4.40 to Rs 283.45, HDFC Bank shot up Rs 5.85 to Rs 240.25, Bank of Baroda leapt Rs 4.80 to Rs 95.15 and Federal Bank rose Rs 5.10 to Rs 103.30. Andhra Bank gained more than 6.25 per cent to close at Rs 30.45, Corporation Bank went up by around 4 per cent to Rs 144.90 while Union Bank of India finished over 5.50 per cent higher at Rs 27.75.
In the last credit policy, the RBI slashed the bank rate, repo rate and cash reserve ratio (CRR) by 25 basis point each to 6.25 per cent, 5.5 per cent and 4.75 per cent respectively.
The market, which expects the bank rate to be cut to 5.75 per cent, is looking forward to stronger profits as banks’ treasury income is boosted by softer interest rates.