Banking shares rally after RBI cuts repo rate

Banking shares are in demand with the Bank Nifty surging 581 points to 20,542 in early morning deal on NSE after the Reserve Bank of India (RBI) cut the repo rate by 25 bps to 7.5% today.

Punjab National Bank, Bank of Baroda, Kotak Mahindra Bank, Canara Bank, Bank of India, Axis Bank, ICICI Bank, HDFC Bank and State Bank of India are up between 2-3%.

The cash reserve ratio was kept unchanged at 4%. The central bank said the need to act outside the policy review cycle is prompted by two factors.

At 0919 hours, Bank Nifty was up 374 points or 1.87% at 20,335 compared with 0.85% rise in the CNX Nifty.