By Vivek Kumar M
(Reuters) -India’s benchmark indexes rose in early trade on Tuesday as investors scooped up financials after the central bank relaxed the deposit buffer rate for lenders.
The Nifty 50 was up 0.38% at 24,217.7 as of 10:39 a.m. IST, while the BSE Sensex added 0.43% to 79,750.18.
The Reserve Bank of India (RBI) on Monday directed lenders to assign a lower-than-proposed buffer rate of 2.5% on digitally linked deposits, with a one-year compliance deadline.
The central bank also reduced the ‘run-off’ factor on wholesale deposits into banks from non-financial entities, like partnership firms and trusts, to 40% from 100%.
Nuvama Institutional Equities said Kotak Mahindra Bank and IndusInd Bank will be key beneficiaries as they have higher wholesale deposits compared to other banks.
“The revised guidelines will offer another shot in the arm, easing the funding and liquidity conditions for banks and further supporting their operating performance,” Motilal Oswal Financial Services said in a note.
Kotak Mahindra Bank and HDFC Bank rose 2.3% and 2.1%, respectively, leading financials 1% higher.
In contrast, IndusInd Bank tumbled nearly 4% after The Economic Times reported the lender has roped in EY for a second forensic audit to probe a 6 billion rupee ($70.5 million) discrepancy related to the accrual of interest income in its microfinance portfolio.
The stock has been under pressure since last month when it disclosed accounting lapses in its derivative deals.
Metals rose 1% after the government imposed temporary safeguard duty on some steel imports to curb cheap shipments, primarily from China.
Meanwhile, IT stocks inched 0.5% lower, after a more than 2% jump in the previous session.
The broader mid- and small-caps were up about 1.1% each.
Among other stocks, 360 One Wam added 2% after the wealth manager announced plans to acquire UBS’ India wealth business for $36 million.
($1 = 85.1100 Indian rupees)
(Reporting by Vivek Kumar M; Editing by Sumana Nandy and Sonia Cheema)
