Stable rate regime puts bank stocks on fire

Mumbai, Sept 28 | Updated: Sep 29 2006, 05:30am hrs
The stabilising interest regime in the economy and also across the globe in addition to fund buying has put the banking sector stocks on fire on bourses for quite some time now and Thursday was no different.

The BSE Bankex gained a massive 218 points or nearly 4% on Thursday to end the day at a new all-time high of 6,094.47. During intra-day trades, the index touched a high of 6,114. This at a time, when the benchmark Sensex ended the day with a marginal gain of 14 points at 12,367.

The impressive run of the banking stocks is further corroborated by the fact that in the last one week, the BSE Bankex has gained more than 6% or 360 points, while the Sensex has gained less than 1% or 106 points.

According to banking analysts, investors are now expecting stabilisation in the interest rate regime and so are getting more and more bullish on the sector.

"A lot of uncertainty was in the air as far as interest rates are concerned. This is no longer the case with the Fed also signalling a pause in the interest rate hikes. Further, a lot of fund buying is also being witnessed just ahead of the results season, which might see the banking players coming out with impressive numbers", said an analyst who tracks the banking sector.

Incidentally, on Thursday, the top 10 gainers of the A group (housing more than 200 stocks) comprised of nine banking stocks including Syndicate Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda, Bank of India and UTI bank, among others. All these banks gained in the range of 5% to 8% each.

Additionally, most of the above-mentioned bank stocks have gained in the range of 10% to 18% in the last one week since September 21.

On the other hand, the banking majors like State Bank of India (SBI), ICICI Bank and HDFC Bank, which also form a part of the Sensex, gained in the range of 5% to 7% each in the last one week. On Thursday, while SBI gained 2.95%, ICICI Bank and HDFC Bank moved up by 2.94% and 3.20%, respectively.