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Banking shares surge on RBI rate cut expectations

UMBAI: Banking shares were the frontrunners in Monday's rally, on expectations of a rate cut by the Reserve Bank of India in its monetary policy review on Tuesday.

At 11:10 am, the BSE Bankex surged 4.24 per cent with HDFC Bank, ICICI Bank and Union Bank posting smart gains.

HDFC Bank climbed 5.73 per cent to Rs 1,634.60, ICICI Bank added 4.95 per cent to Rs 1,243.10, Yes Bank was up 3.7 per cent at Rs 221.50, Allahabad Bank gained 3.51 per cent to Rs 103.10 and Union Bank rose 2.78 per cent to Rs 166.55.

"RBI will spring a surprise and reduce interest rate by half a per cent. We have started ignoring the US, as a rate cut by the Fed is not expected. The upward bias in the domestic market will remain," said Amit Dalal, managing director of Amit Nalin Securities.

Dalal added that in case of an RBI rate cut, banking shares and other interest sensitive sectors will do better.

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