What triggered the 15% rally in bank stocks today?
Nifty Bank, which consists of 10 stocks, saw its best day in about two months.
by Shubham Raj
NEW DELHI: Bruised and battered for weeks, banking stocks suddenly witnessed brisk buying on Wednesday as investors downplayed worries about possible escalation in bad loan burdens to lap up these stocks at attractive prices. Some stock specific news also helped the counter.
Nifty Bank, which consists of 10 stocks, saw its best day in about two months, rising over 7 per cent. Nifty Private Bank Index added 7.46 per cent while Nifty PSU Bank Index jumped 3.40 per cent.
Axis Bank soared 14 per cent to Rs 389 after reports that it has initiated discussions with private equity group Carlyle for fund infusion. Its peer Kotak Mahindra Bank rallied 5.58 per cent to Rs 1,217 after the private lender launched a qualified institutional placement offering to raise up to Rs 7,500 crore.
Among other major gainers were ICICI Bank, Bandhan Bank, HDFC Bank, Federal Bank and IndusInd Bank, which rose up to 9 per cent.
Analysts said buying by some institutional investors which also triggered a bout of short covering were the main reasons behind Wednesday's rally. “Banking stocks saw some institutional buying. A couple of foreign institutional investors (FIIs) were continuous sellers till about 4-5 days back. That selling has come to an end. Now, others are finding the prices attractive,” said Deepak Jasani of HDFC Securities.
Nifty Bank, which has been bouncing from its support levels for some time now, also saw short covering and rollover of positions, said Siddhartha Khemka of Motilal Oswal Financial Services.
Thanks to the rally in key bank stocks, the benchmark indices snapped their three-day losing streak. The 30-share Sensex rose 3.25 per cent, or 995.92 points, to close at 31,605, while broader 50-share Nifty climbed 3.17 per cent, or 285 points, to end the day at 9,314.