Banking sector makes a comeback, leads the gainers on BSE

The banking sector is finally showing a positive response to the rate cut announced by the Reserve Bank of India. The BSE Bankex is currently trading at 3,803.90, up by 2.03% from its previous closing.

ICICI Bank is currently trading at Rs 279.40, up by 9.80 points or 3.64% from its previous closing on the BSE.

Punjab National Bank is currently trading at Rs 306.50,up by 14.20 points or 4.86%.

SBI is trading at Rs 946.50, up by 11.95 points or 1.28% from its previous closing.

Yes Bank is trading higher by 2.06% or 0.90 points to Rs 44.50 on the BSE.

The Reserve Bank of India (RBI) on Wednesday reduced the repo and reverse rates by 50 basis points (bps) each, a move that will prompt banks to reduce lending and deposit rates.

The repo rate, the rate at which RBI lends to banks, has been cut to 5%, while the reverse repo rate, or the rate at which the central bank absorbs liquidity, has been reduced to 3.5%.

Over the past three months, RBI has slashed the reverse repo rate 250 basis points. With the latest repo rate reduction, the fifth since October 20, the overall cut since the global credit crisis intensified totals up to 400 basis points.