RBI to conduct open market purchases worth ₹1.25 lakh crore; Banking shares in focus

Shares of leading private and public sector banks will remain in focus on Tuesday after the RBI announced extra liquidity measures on Monday. Leading PSU Banks like Punjab National Bank, State Bank of India, Bank of Baroda and some private banks like Axis Bank, ICICI Bank closed up to 2.3% higher on Monday.

To maintain sufficient liquidity in the system, the Reserve Bank of India has decided to conduct open market operations (OMO) purchase auctions of Government of India securities for an aggregate amount of ₹1.25 lakh crore. The OMOs will take place in tranches starting May 6 with the first auction worth ₹50,000 crore, the second on May 9 worth ₹25,000 crore, the third on May 15 worth ₹25,000 crore and another ₹25,000 crore on May 19.

This comes after the RBI recently conducted liquidity injection through ₹40,000 crore worth of OMOs in April and ₹1.5 lakh crore worth of variable repo rate auctions. Earlier in March, the central bank conducted open market purchases worth ₹1 lakh crore in two tranches. Apart from these measures, the RBI also reduced interest rates by 25 bps last week, further aiding credit demand in the economy.