The Reserve Bank of India (RBI) has increased the first tranche of its Open Market Operations (OMO) purchase from Rs 20,000 crore to Rs 40,000 crore, as part of a broader plan to inject Rs 1.5 lakh crore into the banking system.

This decision comes after a review of the current liquidity conditions and evolving market dynamics. However, despite the liquidity infusion, banking stocks remained under pressure in early trade on Tuesday.

Bank Nifty trades lower amid market volatility

Bank Nifty opened at 49,812.15, down 0.32 per cent from its previous close of 50,158.85, and continued to trade in negative territory. At 10:45 AM, Bank Nifty was down 0.71 per cent at 49,628.30, indicating a weak sentiment in the banking sector.

The index has traded in the range of 49,906.75 to 49,535.25 so far, with key banking stocks facing selling pressure.

Top Performers

Among the top performers in the Bank Nifty index were IndusInd Bank, Axis Bank, and AU Small Finance Bank, which saw marginal gains despite overall market weakness.

On the losing side, Punjab National Bank, Kotak Mahindra Bank, and Canara Bank registered notable declines, reflecting investor concerns over short-term market stability.

Market reaction to RBI’s liquidity measures

While RBI’s decision to double the OMO purchase is expected to ease liquidity constraints and support credit growth, the banking sector has reacted cautiously. Analysts suggest that concerns over inflation, global interest rate trends, and overall market sentiment are influencing investor decisions.

Sectoral performance: Banks underperform broader markets

The broader Nifty index also faced selling pressure, with Nifty Auto dropping over 1 percent. Meanwhile, Nifty FMCG and Nifty Metal were among the top-performing sectors. Despite the RBI’s liquidity boost, banking stocks failed to gain traction, reflecting a cautious market outlook.

Outlook: Will banking stocks rebound?

Market participants will closely monitor upcoming economic data and RBI’s policy stance for further cues. While the liquidity boost is a positive step, sustained buying in banking stocks may require stronger market confidence and stability in global economic conditions.