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Bank stocks surged today on speculation base rate guidelines might get diluted.
NSE bank index gained 2.7 per cent and heads towards its biggest single day gain since August 14.
State Bank of India was up 3.2 per cent, Bank of India up 6 per cent, and Bank of Baroda was up 5.4 per cent.
Among private lenders, YES Bank surged 5.7 per cent, while ICICI Bank surged 4.2 per cent.
Central bank’s base rate guidelines will be diluted and more time would be given for the transition, according to traders.
The Reserve Bank of India had issued draft guidelines last week asking banks to calculate their base lending rates on the basis of the marginal cost of funds instead of the current practice of average cost.
Short-covering in derivatives also helped; the bank index was already oversold on daily charts with 14-day RSI at 27.5 at the end of the previous session.
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