Bank Nifty rallied to a nearly 18-month high and closed at 19,531.55, up 1.64% or 314.55 points. Bank of India was the biggest gainer as its shares were up by 4.45% to close at R116.30, this was followed by Punjab National Bank (PNB) whose stock closed at R127, up by around 3%.
Stocks of ICICI Bank, Bank of Baroda, HDFC Bank, Canara Bank, State Bank of India and Yes Bank were up between 1% and 3%. Shares of other banks like Axis bank, Kotak Mahindra Bank, IndusInd Bank and Federal Bank were up between 0.4% and 1%.
Bank Nifty has increased by 15.42% in 2016 so far, outperfroming Nifty 50 which was up by 10.04% during the same period. On Tuesday, Nifty 50 closed to its 16-month high at 8,744.35, up 1.59% or 136.90 points. Ambuja Cement, Bosch, Grasim, ACC and Eicher Motors were among the gainers as their stock rallied between 3% and 4%.
Stocks of HDFC Bank, Axis Bank, Kotak Mahindra Bank, Indusindia Bank, Federal Bank, Yes Bank and State Bank of India rallied to its 52-week high during the Tuesday trading session.
According to analysts at Kotak Institutional Equities, the rally comes at a time when the earnings of banks declined by 26% y-o-y for the three months to June. The report published by the brokerage stated that “Impaired loans increased 30 bps q-o-q to 10.4% with gross NPLs up 50 bps q-o-q to 7.5% while restructured loans declined 20 bps q-o-q to 2.9%.”
In a note to investors, the brokerage said near to medium term prospects for the Indian banking sector looks challenging as the growth in Net Interest Income(NII) would remain sluggish. “Public sector banks (except SBI) are impacted more (NII decline of 1% y-o-y) due to slow loan growth (or decline in some cases) and continued interest reversals due to high slippages,” the brokerage said.
M-cap of BSE-listed firms hits all-time high
Boosted by a strong stock market show on Tuesday, the total market capitalisation (m-cap) of BSE-listed companies surged to an all-time high of R110.7 lakh crore ($1.64 trillion).
Following the sharp rally in stocks, investor wealth rose by R1,39,948 crore to R1,10,70,610 crore. The BSE benchmark Sensex soared 440.35 points to end at 28,343.01 on Tuesday.
“Renewed buying interest from FIIs helped benchmark indices to break free from the excruciating range seen all through August, and this seemed to have attracted further participation from those waiting for a clearer signal,” said Anand James, chief market strategist, Geojit BNP Paribas Financial Services Ltd.
TCS is the most valued Indian firm with a market valuation of R5,02,202.97 crore, followed by Reliance Industries Ltd (R3,45,650.10 crore), HDFC Bank (R3,22,240.25 crore), ITC (R3,11,383.66 crore) and Infosys (R2,39,111.94 crore).
Among the 30 Sensex companies, 29 scrips ended higher, led by Asian Paints and Bajaj Auto. Bharti Airtel fell by 2.82 %. BSE is among the world’s 10 largest exchanges in terms of market value, while it is the biggest in terms of number of firms listed on its platform.