Good Morning! Bank on a wonderful start - IIFL

Should the market open gap up one should be wondering what went right. Making an about turn from its tight money policy, RBI on Tuesday decided to infuse liquidity in the system after a sharp spike was witnessed in the long-term yields in government bonds on Monday. RBI said it will buy long-dated government bonds worth Rs 8,000 crore through an open market operation on August 23 and thereafter decide on the amount and frequency as warranted. RBI has decided that the rule to cut SLR bonds held in HTM book to 23% to be kept in abeyance and banks can retain SLR bonds in HTM at 24.5% of net deposits.

These measures should provide the much needed respite for bank stocks to bounce back with a vengeance. Short covering could push the indices even further higher at least at start. Investors should be extra cautious as times like these and use any spurt to exit counters which have dimmer prospects in the current scenario. Later in the day some sanity could return as investors get back to grapple with real issues.

Source : Equity Bulls

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