Repo rates are the rates at which RBI lends to banks and any hikes tend to puts margin pressure on banks. The Bank Nifty was down more than 1 per cent in trade at 10,424 points.
Among the banking stocks that declined in trade were Axis Bank and IndusInd Bank, which both fell by 2 per cent each, while ICICI Bank fell below the Rs 1000 mark.
PSU banks were the worst hit in trade with Canara Bank and Bank of India falling sharply. Also read 5 quick takeaways from the RBI Monetary policy.
Today's drop in banking stocks came largely after the RBI decided to hike repo rates, against hopes that it would maintain a status quo on rates.