Bank Nifty hits all-time high, jumps over 1% as RBI guv cites room for rate cut; PSU bank stocks lead gains

The Bank Nifty surged sharply in early trade on Wednesday, rising nearly 700 points to top 59,500 at around 10.50 am. The banking index was up 1.2 percent for the day. It has now climbed 16.5 percent in 2025 so far, comfortably outperforming the Nifty 50, which is up 9.7 percent year-to-date.

Gains were broad-based, with all 12 of the Bank Nifty constituents trading in the green. PSU lenders led the momentum. Canara Bank rose 2.2 percent to Rs 151.95, followed by Punjab National Bank, which gained 2 percent at Rs 125.53. Private lenders Axis Bank and IndusInd Bank advanced 2 percent and 1.9 percent, to Rs 1,291.8 and Rs 856.05, respectively. Bank of Baroda advanced 1.5 percent to Rs 291.6.

The strength in banking stocks also came against the backdrop of supportive commentary from Reserve Bank of India Governor Sanjay Malhotra, who reiterated earlier this week that there is still room to reduce policy interest rates.

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In an TV interview, Malhotra said the October monetary policy meeting had “clearly communicated” that scope existed for rate cuts, and that subsequent macro-economic data had not eroded this space. “There is certainly room (to lower rates), but whether the MPC takes a call on that in the coming meeting depends on the committee,” he said.

His remarks come ahead of the next Monetary Policy Committee meeting, which begins on December 3, with a decision expected on December 5. The MPC has already cut the policy repo rate by a cumulative 100 basis points in the first half of 2025, before maintaining a pause in the August and October reviews.

Broader markets were buoyant as well. The upbeat sentiment was aided by positive global cues, with traders increasing their bets that the U.S. Federal Reserve could trim interest rates in December. Weak U.S. consumer confidence data for November and softer retail sales signalled a cooling in consumer spending, reinforcing expectations of a Fed rate cut despite Chair Jerome Powell’s caution last month that a reduction was not guaranteed.