Nifty Bank soars to day's high, up 1% after RBI stands pat on repo rates, shifts to neutral stance

The Nifty Bank index is up over 6 percent year-to-date.

The Nifty Bank index significantly strengthened its early gains, climbing over 1% to surpass the day's high of 51,600 after the Reserve Bank of India decided to maintain repo rates at 6.50 percent, a move aligned with market expectations.

In addition to that, the RBI's monetary policy-setting committee shifted its stance from 'withdrawal of accommodation' to 'neutral.' "The MPC considered it appropriate to change the stance to neutral and remain unambiguously focused on bringing inflation to target durably. Food inflation pressures could see some easing later in the fiscal," RBI Governor Shaktikanta Das said in the monetary policy briefing.

Along with that, the RBI also reduced its inflation forecasts for Q2 FY25, bringing it down to 4.1 percent from the earlier 4.4 percent. The RBI's forecasts for Q3, however, were slightly raised to 4.8 percent from the previous 4.7 percent, while stating that CPI for September is expected to see a big jump due to unfavorable base effects and a pickup in food price momentum. Forecasts for the whole of FY25, however, were kept intact at 4.5 percent.

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The Nifty Bank index reacted positively to the RBI's monetary policy decisions, witnessing an instant spike towards the day's high. Since then, even though the index came off its high, it still stood firm in the green.

At 10:38 am, the Nifty Bank index was trading at 51,503.55, with Axis Bank, SBI, and ICICI Bank being the top contributors. These three large-cap banking stocks rose 1-2 percent.

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