Banking index tops sectoral indices with 3 percent gain

By SiliconIndia   |   Wednesday, April 28, 2010
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Bangalore: In the week, when Reserve Bank of India (RBI) hiked the repurchase (repo) rate, the reverse repo rate and the cash reserve ratio by 25 basis points each, the banking index topped the gainers' list with a gain of five percent. Metal and Realty index followed the banking index with gains of 3.1 and 1.4 percent, respectively. RBI is taking cautious steps while tightening the policy. The hikes in the CRR in January and February, and hike in the repo rate in March, and now another hike in the CRR and repo rate reflects this. It is expected that even with the current hike in the repo rate and CRR banks will not increase loan interest rates immediately as liquidity is high due to the lower credit off-take. However, the costs are going up and the CRR hike will also draw out some liquidity. Hence, a rate hike is imminent in the coming months. In the currency market, the rupee weakened slightly but remained range-bound against the $ in a narrow range of Rs.44.4 to Rs.44.8 per $. The top Sensex gainers in banking sector were SBI (up 10.4 percent) and ICICI Bank (up six percent).
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