Banking stocks were trading higher ahead of RBI's bi-monthly monetary policy decision with benchmark indices too clocking gains in line with bullish global equities. BSE Bankex opened 156 points higher at 24,586 against previous close of 24,430.
Of 10 bankex components, seven were trading in green.
HDFC Bank (0.95%), City Union Bank (0.69%), SBI (0.65%), IndusInd Bank (0.45%), ICICI Bank 0.40%, Kotak Bank (0.33)%, and Federal Bank (0.19)% were top gainers on the index.
On the other hand, Bandhan Bank (0.51%), Axis BANK (0.90%) and RBL Bank (1.06%) were the top losers on the index.
The outcome of today's MPC meet is crucial amid growing demand for one-time loan restructuring by industry chambers.
RBI has cut repo rate by 115 bps ever since the COVID-19 pandemic hit the country in March. Last year, the RBI had cut repo rate by 135 bps as growth continued to recede. The Monetary Policy Committee will announce its policy stance at 12 noon today, where the central bank is widely expected to cut repo rates.
According to a Bloomberg poll of 42 economists, 21 expect another 25 bps rate cut while 20 say the RBI may continue the status quo. Around two-thirds of economists in a Reuters poll expect the RBI to cut repo rate by another 25 basis points (bps and once more next quarter to a record low of 3.50%.
Meanwhile, bank nifty was trading 94 points or 0.44% higher at 21,603. The index opened 135 points higher at 21,644 against previous close of 21,509.
Apart from banking stocks, IT shares took the market higher ahead of the RBI policy. BSE IT index was trading 141 points higher at 18,117 in morning trade.
Broader indices Sensex and Nifty too were trading in the green. Sensex rose 230 points to 37,897 and Nifty gained 70 points to 11,173 in early trade.