Bank stocks jump on FIPB nod to ICICI Bank

A bounceback witnessed in the global markets following the US Federal Reserve?s decision to cut the discount rate by 50 basis points ahead of last week-end, and the approval given by the Foreign Investment Promotion Board (FIPB) to ICICI Bank to sell up to 24% stake in its newly-formed subsidiary ICICI Financial Services to foreign investors helped the banking sector stocks the most on the domestic bourses.

The Bombay Stock Exchange (BSE)?s Bankex was the biggest gainer among all the broader and sectoral indices on Monday.

The Bankex gained the highest, up 4.23% or 311 points at 7,662 points as against the Sensex, which could recover 2.02% or 286 points at 14,426 points.

The BSE Bankex opened at 7,614 points in the morning. It went up to touch an intra-day high of 7,726 points and moved to the day’s low of 7,575 points in intra-day trading. Out of 18 stocks in the index, 17 ended in the green while only one stock — Centurion Bank of Punjab — ended with a minor loss of 1.2% to close at Rs 39.80.

A senior functionary from a domestic bank’s capital market division said the US Fed’s decision to cut its discount rate by 50 bps to 5.75% has caused a bounceback in the global market. It also helped the banking stocks which gained the highest at the bourses.

?In fact, the banking stocks were badly battered in the recent past due to the subprime mortgage crisis. And, the current valuation of these stocks were compelling,? the official said.

Hence, the Federal Reserve?s decision has strengthened the sentiments of the investors towards banking stocks. The investors have pumped in money in the banking stocks, keeping in mind the huge growth potential of the sector, he said.

The stock of Kotak Mahindra Bank gained the highest. It went up by 8.1% or Rs 51.65 to end at Rs 686.45.

But, the rise in the stock price of the ICICI Bank has helped the Bankex to gain the highest at the bourses. It went up by 5.5% or Rs 46 to close at Rs 871.95. The stock has a weightage of 41.5% in the Bankex.

The HDFC Bank went up by 5.2% or Rs 55.75 to end at Rs 1,125. Among other important bank stocks, the stock price of Axis Bank went up by 5.1% or Rs 29.30 at Rs 603.95. The Union Bank went up by 2.5% or Rs 3.30 to close at Rs 132. Similarly, the State Bank of India went up by 2% or Rs 30.95 to end at Rs 1,550.45 at the close of the market.