The cut in repo rate announced by the RBI Governor, Raghuram Rajan, led to a rally in banking stocks with the Bank Nifty surging by over 330 points in the morning trade today.

The buoyancy witnessed by the banking counters was so strong that 6 out of the 12 bank stocks in the Bank Nifty hit new yearly highs this morning.

The RBI announced today a reduction in repo rate by 0.25 per cent - from 7.75 per cent to 7.50 per cent. This is the rate of RBI lending to banks for short-term liquidity.

The expectation is that this would lead to lowering of rates by banks, which in turn would have a positive impact on borrowings, including home loans.

The Bank Nifty was all green with six of the constituents - Kotak Mahindra Bank, Axis Bank, HDFC Bank, IndusInd Bank, YES Bank and Federal Bank - surging to new 52 week highs.

Kotak Mahindra Bank posted the biggest gains in terms of value, up by Rs 33.85 to Rs 1,442.55. It touched a new yearly high of Rs 1457.75. HDFC Bank shares jumped by Rs 10.80 to Rs 1094.15 (new high Rs 1,109.30) and Axis Bank gained Rs 10.10 to Rs 641.50 (new high Rs 654.90).

IndusInd Bank touched a new high of Rs 962.55 before easing to Rs 946.60, a gain of Rs 8, YES Bank was up by Rs 12.35 at Rs 891 (new high Rs 908.95) and Federal Bank was barely in the green by 5 paise at Rs 150.95. Its new yearly high was Rs 154.40.

ICICI Bank was trading at Rs 356.10, a gain of Rs 7.75.

Among the PSU banks, the major gainers were PNB, BoB and SBI. PNB gained Rs 5 to trade at Rs 174.25, BoB was up by Rs 4.80 to Rs 192 and SBI was up by Rs 6.to Rs 308.60. Canara Bank gained Rs 10.95 to Rs 439.90.

All the 12 shares constituting the NSE Bank Nifty were in the green with the Bank Nifty gaining nearly 335 points.

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