Banking stocks, after having been butchered down for the past few days are back on the buyers list. PSU as well as private sector banks are up and the lead is taken by Yes Bank. The stock had hit a new 52-week low yesterday at Rs.220.20 and today, it has bounced back at Rs.277.95, up over 14.5%.

Coined as “Operation Twist” the RBI has taken measures to ensure liquidity and reduce the blow of falling rupee and rising yields on banks. It has stated that Banks can retain liquidity ratio (SLR) bonds held in the to maturity (HTM) category at 24.5%. banks will also be allowed to transfer SLR bonds to HTM from available for sale (AFS) as one-time measure and gilts can be transferred from AFS to HTM based on July 15 price. RBI has stated that depreciation due to MTM valuation for AFS/HTM securities can be spread over equal instalments in 2013-14. Banks will incur MTM losses when yields rise and these moves of RBI are to ease liquidity and thus loosen up the hardening long term yields. RBI will also buy bonds via OMOs to infuse Rs 8,000 crore on August 23 and lower the quantum of cash-management bill issuance. Follwing these moves, most of the brokerage houses have put out a short term buy call on PSU and private sector banks.