Nifty PSU Bank climbs nearly 3%; IOB, UCO Bank, Canara Bank among top gainers

State-run Indian banks saw a significant uptick in today's trading session, leading up to the Reserve Bank of India's monetary policy announcement on February 8, where the RBI is expected to maintain the status quo for the sixth time in a row.

According to Madan Sabnavis, Chief Economist at Bank of Baroda, there is a very high likelihood that the repo rate will remain unchanged again.

"Repo cut unlikely; a probable change in liquidity stance. RBI was clear that repo cuts were out of the picture unless headline inflation came down and sustainably remained at the 4% target. Hence, given the current CPI level, the possibility of a rate cut has been ruled out," said Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers.

Also Read: RBI MPC 2024: Can the Indian central bank precede US Fed in cutting rates? Experts take on repo rate, policy stance

In its December meeting, the RBI made a unanimous decision to maintain the policy repo rate at 6.5%. This rate has been consistently held at 6.5% since February 2023. On the other hand, the yield on the 10-year Indian government bond dropped in Wednesday's trading session to 7.0780% from Tuesday's close of 7.0920%, as per the Trading Economics data.

The Nifty PSU Bank index finished today's session with a gain of nearly 3% to 6,743 points, with 11 out of 12 constituents of the index finishing today's trade in positive territory. The index also touched another record high of 6,788 points. 

Indian Overseas Bank stood as the top gainer with a rally of 18% to ₹79.7 apiece, and the stock also touched a new multi-year high of ₹81. UCO Bank shares also continued their winning streak, reaching a fresh 52-week high of ₹70 each. The stock concluded the session with a 16.33% gain, settling at ₹68.40 per share.

Central Bank of India stock also ended today's session with a notable uptick of 11.4%, settling at ₹74.15 apiece. Canara Bank shares surged nearly 6% on the bank's proposal to consider a split of its equity share.

Also Read: Finance Ministry aims to transfer ₹1-lakh crore stressed assets to bad bank by March-end

State Bank of India was another star performer in today's trade with a gain of 3.8%, and during the intraday trade, the stock touched a new all-time high of ₹678 apiece. This propelled the bank's market capitalisation to surpass the ₹6 lakh crore milestone, making it the second PSU firm to achieve this feat, following the Life Insurance Corporation.

Other PSU bank stocks such as Punjab & Sind Bank, Bank of India, Punjab National Bank, Union Bank of India, and Indian Bank all finished today's session with gains between 0.1% and 3.7%.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.