Bank Nifty fell further in the late afternoon trade on 7 February, extending the post-RBI monetary policy decline as reduced growth forecast and absence of further liquidity boost weighed on heavyweight stocks HDFC Bank and ICICI Bank.
At 2.30 pm on Friday, the Bank Nifty was down 0.95 percent or about 490 points to 49,900 points. Benchmark NSE Nifty 50 fell 0.6 percent to 23,470 points.
HDFC Bank share price was at Rs 1,727, down about 1 percent, while ICICI Bank stock was down 1.5 percent at Rs 1,253. HDFC Bank shares fell into red from green earlier in the day. The biggest loser on the Bank Nifty index was the State Bank of India stock, down 2.6 percent at Rs 733, continuing to drag since the morning session a day after the PSU lender declared its Q3 financial results.
Also read: Our LIVE blog on MPC meeting
Earlier today, the Reserve Bank of India's Monetary Policy Committee cut repo rate by 25 basis points to 6.25 percent as expected, but maintained the 'neutral' policy stance. Further, the RBI cut India's growth forecast for the upcoming fiscal quarter to 6.7 percent from 6.9 percent, and for the following quarter to 7 percent from 7.3. percent.
On the other hand, while Governor Sanjay Malhotra reaffirmed the central bank’s commitment to provide sufficient system liquidity, and take appropriate measures to ensure orderly liquidity conditions, he stopped short of announcing any further immediate measures on this front.
RBI's new Governor Sanjay Malhotra on February 7 announced the central bank's first rate cut since May 2020. Notably, the central bank has broken its longest-ever pause with the repo rate cut. In May 2020, the RBI had lowered the repo rate to 4 percent to cushion the economy from the COVID-19 pandemic's impact.
Since then, the central bank has raised the repo rate seven times to 6.5 percent to combat rising inflation, supply chain disruptions, and global price surges. The rate pause had been in effect since February 2023, making this recent rate cut a significant development.
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