Bulls return to banks on RBI's FCNR(B) initiative

Bank stocks surged on the RBI's FCNR(B) deposit rate mechanism, with Bank Nifty gaining 4.25% last week versus the Nifty's 1% rise, and all constituents except Yes Bank and PNB advancing 1-7%. The initiative, aimed at helping banks raise cheaper foreign currency deposits from NRIs, is expected to attract $35-40 billion in incremental inflows against an existing base of ~$30 billion. Analysts see continued upside driven by short covering and fresh long buildup, with HDFC Bank flagged for sustained bullish participation, while recommending a buy-on-dips approach as long as Bank Nifty holds above 55,500.