Bank stocks slip up to 3% after RBI rate cut

Banking stocks declined up to 3 per cent in the afternoon trade on Friday after the Reserve Bank of India cut its key rates by 0.25 per cent to boost the economy. Meanwhile, the RBI also slashed estimate of economic growth for the ongoing financial year to 6.1 per cent from its earlier estimate of 6.9 per cent.

Nifty Bank index on the NSE was trading 1 per cent down at 28,121 at around 12.05 pm (IST) with Federal Bank falling the most at 2.70 per cent. It was followed by Kotak Mahindra Bank (down 2.47 per cent), YES Bank (down 1.41 per cent), HDFC Bank (down 1.31 per cent) and RBL Bank (down 0.80 per cent).

On the other hand, IndusInd Bank, State Bank of India and IDFC First Bank were up between 0.25 per cent and 0.69 per cent.


The repo rate, at which it lends to the system, has been brought down to 5.15 per cent to help reduce borrowing costs for home and auto loans, which are now directly linked to this benchmark.

This is the fifth straight cut in rates by the RBI in its key rates in as much policy reviews in 2019, and takes the total quantum of reductions to 135 basis points.

The benchmark equity indices also pared their day’s gains after the announcement by the RBI. The 30-share Sensex was trading 33 points, or 0.09 per cent down at 38,074, while the 50-share Nifty index was down 22 points, or 0.19 per cent, at 11,292.