Divestment hopes fire up bank stocks

Mumbai, Jan 4 | Updated: Jan 5 2006, 05:59am hrs
The expectations of further banking reforms propelled a rally in the public sector banks (PSBs) stocks which helped the BSE Bankex to end at an all- time high.

The BSE Bankex outsmarted the 30-share Sensex and gained 1.65% or 85.66 points to end record high at 5,275.82 points.

A good rally in bank stocks also jacked up the Sensex which ended all time high of 9,648.08, up 108.71 points or 1.14%. Similarly, S&P CNX Nifty of the National Stock Exchange (NSE) also closed above 2,900 level for the first time ever and all time high by gaining 0.73% or 21.05 points at 2,904.40 points.

The Bankex opened firm in the morning at 5,197.71 points but moved slightly lower at 5,183.95. However, after that it moved northward to touch days high of 5,297.74 points. Out of 18 bank stocks, 17 advanced and only one closed in the red.

According to an analyst from a domestic brokerage firm, The domestic PSBs are in the process of positioning themselves in the global market. Their ability to raise capital from the domestic market and reducing non-performing assets (NPAs) have strengthened investors sentiments towards the banking counter. The market is expecting that the government may take steps to dilute its stakes in the PSBs and would take initiative for the mergers of the unviable banks.

Stock of Bank of Baroda (BoB) was the top gainer with a gain of 4.83% or Rs 11.85 to close at Rs 257.35. The Bank of India (BoI) went up by 4.63% at Rs 132.15, Union Bank of India went up by 4.52% at Rs 127.05, Indian Overseas went up by 3.01% at Rs 97.55 and Allahabad Bank went up by 2.89% at Rs 88.95. The Indusind Bank was the only bank which dipped by 3.29% at Rs 58.85 at the end of the trading.