Bank stocks are more focused than the Reserve Bank’s monetary policy. Moreover, a slight surge in credit growth, along with market experts, has given the bull markets a boost in banking and financial stocks – which has increased investor appetite for these stocks.
The ‘situation’ with the ‘accommodation position’ at the Reserve Bank is expected tomorrow at the end of the policy. RBI policy repo rate changes have a direct impact on bank lending and further increase demand for credit.
At 2.37 pm, the Bank Nifty traded up 318.05 points, or 0.90%, at 35,691.80. The index reached a high of 35,723.70 in early trade.
Kodak Bank, Bandhan Bank, and Axis Bank each gained 2% for the rally. SBI rose 1.5%.
Index Heavyweight HDFC Bank rose more than 1%. India Ratings HDFC Bank Limited (HDFC) has confirmed the long-term issuer rating at IND AAA with a consistent overview and the short-term issuer rating at IND A1 +.
The ratings consistently reflect the financial strength of HDFC, its varied revenue profile and performance, and a consistent and optimal class of circulation in the Indian banking system.
Other stocks such as Federal Bank, BNP, and ICICI Bank were slightly higher.
However, on the downside, Sindhu Bank fell 2% after the lender denied rumors that it was a subsidiary of Induja Bank.
RPL Bank fell 1%, IDFC First Bank and AU Small Finance Bank fell slightly.
The Reserve Bank is an inflationary path The central bank and its monetary policy decisions revolve around the CBI movement. The Reserve Bank is scheduled to announce its June 2021 policy results tomorrow. The central bank has kept the repo rate unchanged at 4% amid the risk of inflation caused by the COVID-19 epidemic.
Several stock experts have said in various reports that banking and financial stocks will continue to fuel Talal Street in the coming trading sessions. These experts believe that stocks like SBI, HDFC Bank, Bandhan Bank, and Canara Bank have the potential to move north.
According to the latest data released by the Reserve Bank of India (RBI) on a year-on-year basis (y-o-y), non-food bank lending grew by 5.7% in April 2021 and 6.7% in April 2020.
CARE estimates that non-food credit growth increased in April 2021 and grew by 5.7% compared to 6.8% in April 2020. Failure to report risk aversion on both borrowers and lenders was an improvement in bank credit growth despite the previous year’s low base (early period of locks).
Overall credit growth continues to be moderate as risk aversion and continued liquidity with the Reserve Bank continue. In addition, the downturn in large businesses and the slow growth in the services sector have also curbed overall bank credit growth.