Investing.com -- Indian bank stocks rose on Tuesday, led by a 1.1% jump in the Nifty Private Bank index, as investors positioned for a potential Reserve Bank of India rate hike this week amid signs that inflationary pressures are broadening.
Kotak Mahindra Bank was the strongest gainer among the major lenders shown, rising 3.77% to 431.70 rupees, while Axis Bank gained 1.15% to 1,236.20 rupees. HDFC Bank rose 0.72% to 709.90 rupees, while ICICI Bank gained 0.17% to 1,334.20 rupees.
RBI rate hike bets strengthen
Markets have increasingly priced in a rate increase at the RBI's monetary policy meeting on Wednesday, with the central bank facing pressure to respond as inflation rises and economic growth remains resilient.
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Nearly 60% of economists polled by Reuters expect a 25-basis-point hike, which would be the RBI's first increase in almost four years and take the benchmark repo rate to 5.50% from 5.25%. Swap markets are more decisive, fully pricing a hike and implying about 100 basis points of increases over the next 12 months.
Consumer inflation accelerated to 4.82% in August, remaining above the RBI's 4% medium-term target for a third consecutive month, while the economy grew 7.8% in the April-June quarter, strengthening the case for policymakers to begin tightening.
A hike could support the rupee and make Indian bonds more attractive to overseas investors, while also raising borrowing costs for households and businesses. The rupee remains around 1% below its record low reached in May.
Public-sector lenders also advanced - Indian Bank rose 0.43%, Bank of Baroda gained 0.50%, Union Bank of India rose 0.57%, Punjab National Bank added 0.26% and Canara Bank gained 0.17%.
Original Article
Indian bank stocks rise as RBI rate-hike bets build, Nifty Private Bank up 1%
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