Banks replace IT as key drivers of Indian shares

Reuters Posted online: Monday, Oct 21, 2013 at 0000 hrs
Mumbai : Banks are becoming the main drivers of Indian shares, with the NSE Bank index up 11.8 per cent in October as of Friday's close, compared with a 7.7 per cent gain for the broader NSE index.

That marks a second consecutive month of gains: the banking sub-index gained 6.3 per cent in September after the central bank's move to ease short-term rates offset the impact from its hike in the repo rate last month.

Analysts say gains in banking shares have also been spurred by an initial batch of earnings results in the sector showing stable margins and asset quality that met expectations.

By contrast, gains in IT shares have been slower recently. The sector had been the key driver in markets.

The NSE IT Index has gained 8.1 per cent so far this month, although the sub-index is still up 46.2 per cent for the year compared with the 13.5 per cent fall for banks.