Indian banks surge on speculation base rate guidelines

reuters-India’s NSE bank index gains 2.7 pct; heads towards its biggest single day gain since Aug. 14

** State Bank of India up 3.2 pct, Bank of India up 6 pct, Bank of Baroda up 5.4 pct

** Among private lenders, Yes Bank surges 5.7 pct while ICICI Bank surges 4.2 pct

** Central bank’s base rate guidelines will be diluted and more time would be given for the transition – traders

** Reserve Bank of India issued draft guidelines last week asking banks to calculate their base lending rates on the basis of the marginal cost of funds instead of the current practice of average cost

** Short covering in derivatives also helps; the bank index was already oversold on daily charts with 14-day RSI at 27.5 at the end of the previous session

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