On the day the RBI announced its monetary policy, the Nifty Bank Index surged past its all-time high, reflecting strong market optimism. The rally continued into the next day, with the index touching a new 52-week high of 57,050.
This sharp upward move was driven by a larger-than-expected liquidity boost from the RBI, which reinforced bullish sentiment across banking and financial stocks.
The Reserve Bank of India (RBI) had cut the repo rate by 50 basis points, bringing it down from 6.0 percent to 5.5 percent, as part of a broader monetary easing move. The Standing Deposit Facility (SDF) has been reduced from 5.75 percent to 5.25 percent, while the Marginal Standing Facility (MSF) and Bank Rate have been lowered from 6.25 percent to 5.75 percent.
The cash reserve ratio (CRR) has been cut by 100 bps to 3 percent, releasing approximately Rs 2.5 lakh crore into the banking system and lowering the cost of liquidity for policy transmission.
Top UBS Picks in Banking Sector
UBS states that banks with high LDR or Loan to Deposit ratio and a low LCR or liquidity coverage ratio will benefit the most from the CRR cut of 100 basis points. In mid-cap banks, UBS has picked AU Bank, and among large banks, it has picked HDFC & Axis Bank. These banks have one of the highest LDR and lowest LCR.
NBFC companies that operate in the housing and vehicle finance segment could see better margins and profitability as they lend based on fixed interest rates, and the recent rate cut means that NBFCs can borrow and lower interest rate. Further, Gold financing companies have also hit fresh highs among relaxed regulatory norms by the RBI.
Important Bank Nifty Levels
After breaking out to make a fresh high, the Nearest support zone for the stock is near 55,500 levels, which is 1,000 points below the current level. If that support is broken, The Major support for the Index will be the daily 50 SMA level at 54,260, which is also a support level.
Written By Abhishek Das
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
