Bankex Index Gains 0.50%; Closes At 22,491.47 After 25 Basis Point Rate Cut By RBI
Bankex Close after Rbi Rate Cut
The S&P BSE Bankex Index gained around 0.50 per cent or 94 points to close at 22,491.47 after Reserve Bank of India reduced the policy repo rate by 25 basis points from 6.5 per cent to 6.25 per cent, its lowest in 6 years. The index remained range-bound through the day touching a high of 22,580.43 recovering from the day’s low of 22,318.23.
The rally was witnessed specially in the last hour of trade, after the RBI went ahead and cut the repo rate. Some last minute did little to deter the positive momentum.
With the consensus of all the six members in the committee, Reserve Bank of India (RBI) cut its benchmark interest rate by 25 basis points and retained its projections both on inflation and GDP growth front. While, the gross value added (GVA) projection for 2016-17 was kept unchanged at 7.6 per cent, the Indian central bank expects retail inflation to remain at 5 per cent with upward bias in the near-term.
Importantly, the tone of the policy remained quite undetermined. On one hand, the policy document read that several measures taken by the government to cool food inflation, especially with regards to pulses and these measures would help in moderating the momentum of food inflation in the months ahead and open up space for policy action.
On the other hand, the policy raised some red flags about the inflation trajectory in 2017-18 and said the direct and indirect impact of an increase in House Rent Allowance as part of the Seventh Pay Commission awards may require a tightening of monetary stance.