News

Nifty Bank Index at Day's Low: Banking stocks came under pressure on Friday, dragging the Nifty Bank index close to the day’s low, as markets reacted to the Reserve Bank of India’s monetary policy outcome. The index was trading around 0.5 per cent lower amid heightened volatility following the RBI’s decision to keep policy rates unchanged.

The weakness was more pronounced in PSU bank stocks, with the Nifty PSU Bank index slipping 1.63 per cent to 8,775.85. The decline comes after a strong rally in the segment, which had gained over 3.2 per cent in the previous four consecutive trading sessions, prompting investors to book profits.

Most public sector bank stocks traded in the red. Canara Bank fell 1.49 per cent, Punjab National Bank declined 1.47 per cent, while State Bank of India slipped 1.43 per cent. Bank of Baroda was down 1.34 per cent and Union Bank of India lost 1.32 per cent. Indian Bank, UCO Bank, Bank of India, Indian Overseas Bank and Central Bank of India also ended lower.

Among large banks, stocks such as HDFC Bank, ICICI Bank, Axis Bank and Federal Bank also saw mild losses, adding to the pressure on the Bank Nifty, as reflected in the intraday market data.

The selling pressure followed the RBI Monetary Policy Committee’s decision to keep the policy repo rate unchanged at 5.25 per cent at the conclusion of its February 6, 2026 meeting. The MPC voted unanimously to retain the repo rate under the liquidity adjustment facility.

Consequently, the standing deposit facility rate remains at 5.00 per cent, while the marginal standing facility rate and the Bank Rate continue at 5.50 per cent. The committee also chose to maintain its neutral policy stance.

In its policy statement, the RBI noted that the global economy showed resilience in 2025, aided by trade front-loading, broad fiscal support and accommodative monetary policy. However, it cautioned that inflation in several advanced economies remains above target and that US bond yields continue to trade with an upward bias as expectations of near-term rate cuts fade.

Global equity markets have moved higher, led by sustained investments in technology stocks, even as geopolitical risks, fiscal pressures and divergent monetary policies keep financial markets volatile.

On the domestic front, the RBI raised its real GDP growth forecast for FY26 to 7.4 per cent from 7.3 per cent earlier. Growth projections for Q1 and Q2 of FY27 were revised upward to 6.9 per cent and 7.0 per cent, respectively.

The central bank also revised its CPI inflation forecast for FY26 slightly higher to 2.1 per cent. Inflation for Q4 FY26 is projected at 3.2 per cent, while CPI inflation for Q1 FY27 and Q2 FY27 is expected at 4.0 per cent and 4.2 per cent, respectively.

While the MPC acknowledged that external headwinds have intensified since the previous policy meeting, it said recent trade agreements offer support to the medium-term outlook. For now, however, banking stocks appear to be consolidating after recent gains, keeping the Nifty Bank under pressure.