ICICI Bank, HDFC Bank, Axis Bank shares gain up to 3% ahead of RBI policy meeting

Stock Market today: ICICI Bank, HDFC Bank and Axis Bank share prices gained up to 3% in the morning trade on Tuesday ahead of the RBI policy meeting next week and liquidity booster by the central bank.

Bank Index crosses 49,000

The Nifty Bank index gained up to 2% in the morning trade on Tuesday to highs of 49053. Axis Bank with a a rise of up to 3.8% led the gains for Nifty Bank index. It was closely followed by AU Bank and HDFC Bank which also gained more than 3% in intra-day trades.

Axis Bank along with HDFC Bank, Bajaj Finance, ICICI Bank and Shriram Finance were also among the largest Nifty 50 gainers in trade today.

If the bank index sustains above the 49,000 mark, it may lead to further gains, since it is a crucial level according to technical experts.

Nifty Financial Services index also witnessed strong buying action, led by Cholamandalam Investment and Finance Company and supported by Bajaj Finance, Bajaj Finserv and others.

RBI monetary policy and liquidity measures

The expectations are building around the Reserve Bank of India starting to cut interest rates during the next policy review. As part of the FY 2024–25 program, the RBI Monetary Policy Committee will meet again from February 5–7, 2025. The RBI has six bi-monthly meetings every year.

Since the US Federal Reserve already started rate cuts during an earlier review, Street expectations have been rising on interest rate cuts by the RBI as well.

Bank of America (BofA) Global Research predicts a 25 basis points cut in the repo rate to 6.25% at the February MPC meeting, supported by the delayed US tariffs and focus on local growth and inflation data.

The street confidence was also boosted by RBI's measures to add liquidity to the banking sector after reviewing the present financial and liquidity situation.

These include OMO purchase auctions of Government of India securities for an aggregate amount of ₹60,000 crore and a Variable Rate Repo (VRR) auction that will be held next month. A 56-day VRR auction of a notified amount of ₹50000 crore is to be held.

Further, a 6-month Dollar to Rupee Buy-Sell swap of $5 billion is also to be held on January 31.

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