Nifty Bank surges over 900 points on ₹1.5 lakh crore liquidity boost from the RBI

The Nifty Bank index has gained as much as 2% on Tuesday, January 28, with gains led by index heavyweights like Axis Bank and HDFC Bank, both of which surged 3% each.

Axis Bank, HDFC Bank, IndusInd Bank and ICICI Bank are also contributing to the 120-point gain seen on the Nifty 50 index, amidst the sell-off in the broader markets.

Tuesday’s move comes after the Reserve Bank of India made a slew of announcements to boost liquidity in the banking system on Monday evening.

The central bank will buy bonds worth ₹60,000 crore via Open Market Operations (OMO). This will be done in three tranches of ₹20,000 crore each on January 30, February 13 and February 20.

The RBI will also conduct a 56-day Variable Rate Repo (VRR) auction, for a notified amount of ₹50,000 crore on February 7.

A USD-INR Buy/Sell swap auction of $5 billion for a tenor of six months will also be carried out on January 31 by the RBI.

According to dealers, this ₹1.5 lakh crore liquidity push would equate to the deficit over the last six weeks.

Multiple bankers that CNBC-TV18 had spoken to at the World Economic Forum (WEF) at Davos, highlighted the tight liquidity conditions in the system.

Both HDFC Bank and ICICI Bank are contributing 60 points each to the Nifty 50 gains on Tuesday post the announcements. Axis Bank, after a 3% surge, is contributing 22 points and also features among the top five contributors to the Nifty upside.