Rumours flew thick and fast at the SBI counter. ``Buying emerged at the SBI counter from nowhere and spread immediately to other counters including banks like BoB, Corporation Bank and HDFC Bank. There were heavy orders from FIIs like Morgan, Jardine and Capital International. Morgan is believed to have bought around 30 lakh shares of SBI,'' said a broker.

One rumour doing the rounds was that SBI had announced a cut in deposit rates which would help improve spreads. Thesecond round bought `news' of a CRR cut, with the market guess ranging from 0.5 per cent to 1 per cent. This helped stocks of other banks move up. However, bank analysts ruled out the possibility of a CRR cut at this juncture. ``The system is flush with liquidity while there has been little credit offtake. Hence, a CRR cut does not make sense. The government's borrowing programme has been quite comfortable,'' said an analyst with an FII brokerage. ``A CRR cut can be done only to bring down the cost of borrowing by banks whose spreads have come under pressure,'' he added.

``There were also unconfirmed reports that a dispute on taxes was decided in SBI's favour. The tax was levied on SBI on account of sale of some gilts,'' said a fund manager. This provided the gist for the third round of rumours.SBI, which opened at Rs 233 on the BSE, closed at its intra-day high of Rs 252.90. The stock closed at Rs 253.40 on the NSE. The stock was a topper in turnover at both the bourses with a turnover of Rs 352 crore onNSE and Rs 180.90 crore on BSE.

Other bank stocks also gained marginally with Corporaton Bank gaining Rs 3 to Rs 83.25 while Oriental Bank of Commerce moved up to Rs 32.75 from its previous close of Rs 30.60. The scrip hit the upper end of the circuit on the NSE. HDFC Bank gained from Rs 74.80 to Rs 76.90.