Bank Stocks Jump Up To 8% After RBI Maintains Repo Rate At 5.25%

Following a decision by the Reserve Bank of India (RBI) to maintain the repo rate steady at 5.25%, the stock prices for banks rose by over 8% on April 8.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The Nifty Bank index climbed to an intraday high of 55,552.25. The index has advanced more than 10% over the past five trading sessions. All 14 constituents of the index traded in positive territory.

Broad-Based Gains Across Banking Stocks

Among small banks, AU Small Finance Bank outperformed by climbing over 8%. Similarly, Union Bank of India and IndusInd Bank gained by 7.82% and 6.33%, respectively. As for big-cap banks, HDFC Bank, ICICI Bank, and State Bank of India increased by 3%-5%.

Moreover, the entire banking industry saw robust activity. For instance, the Nifty PSU Banks Index appreciated by more than 5%, whereas the Nifty Private Banks Index appreciated by 4.7%.

Interest Rate-Sensitive Sectors Experience Robust Buying

Shares of financials were among the top gainers from interest rate-sensitive sectors after the policy update. Auto and real estate stocks also moved higher, rising up to 7% during the session.

The rally came after the RBI’s Monetary Policy Committee (MPC), in its April 6–8 meeting, unanimously decided to maintain the policy stance as “neutral” while keeping the repo rate unchanged, according to the RBI.

Policy Decision And Inflation Data

The policy decision follows easing retail inflation trends. India’s Consumer Price Index (CPI) based inflation stood at 3.21% in February, moving closer to the RBI’s medium-term target of 4%, as per official data.

The standing deposit facility and marginal standing facility were also maintained by the central bank at 5% and 5.5%, respectively.

International Trends And Market Environment

This halt in interest rate changes is against the backdrop of some recent geopolitical happenings in West Asia, which have affected global oil markets. The war had pushed up oil prices and increased fears about inflation and growth prospects for economies dependent on imports.

RBI Governor Sanjay Malhotra said geopolitical tensions have weighed on growth and inflation outlook, adding that the central bank remains vigilant on liquidity conditions.

The current policy review also follows the government’s decision to retain the inflation target at 4%, with a tolerance band of ±2%, for a five-year period ending March 31, 2031.

Banking stocks continued to trade higher following the policy announcement, supported by stable interest rates, easing inflation trends, and broad-based buying across financial counters.