The bank index of the Bombay Stock Exchange fell by 0.08 per cent today ahead of the Reserve Bank’s quarterly review of the monetary policy.

The BSE banking index, which tracks share prices of 14 banks, recovered by 0.45 per cent shortly after a moderate hike in short-term lending and borrowing rates by the Reserve Bank today.

The BSE-bankex was trading up 51.80 points, or 0.45 per cent, at 11,451.39 points in afternoon trade.

Shares of the country’s largest lender State Bank of India jumped 1.20 per cent to a high of Rs. 2,437.90 on the Bombay Stock Exchange. The scrip was later quoting at Rs. 2,433.40, up 1.02 per cent.

The broader market Sensex was also quoting higher by 50.33 points at 18,070.38 points.

The Reserve Bank raised its short-term lending and borrowing rates by 0.25 per cent and 0.50 per cent, respectively to bring inflation down to six per cent, but the move would put pressure on banks’ interest rates.

The increase in repo and reverse repo rates is largely in line with the expectation of the market participants, analysts said.

“This (rate hike) is a commendable policy decision, to strike a balance between the inflation and growth,” Jagannadham Thunuguntla, Equity Head, SMC Capitals said.

Private sector lender ICICI Bank was trading higher by 0.72 per cent at a high of Rs 922.50. Later, the scrip was trading at Rs. 919.15, up 0.36 per cent.

The pack of other banking stocks like HDFC Bank was (up 0.44 per cent), Bank of Baroda (0.04 per cent), Bank of India (0.98 per cent), Canara Bank (0.39 per cent), IDBI Bank (1.01 per cent), Indian Bank (1.60 per cent).

Meanwhile, some stocks were still trading lower, including, Bank of Maharashtra (down 0.08 per cent), UCO Bank (0.93 per cent).

In its monetary review, the central bank, however, kept its cash reserve ratio (CRR), the cash which banks are required to keep with RBI, unchanged.

Earlier this month, RBI had hiked repo and reverse repo rates by 0.25 per cent.

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