The surprise rate cut by the Reserve Bank of India has not only lifted the BSE Bankex to a fresh high...
The surprise rate cut by the Reserve Bank of India has not only lifted the BSE Bankex to a fresh high but also brought down the gap between the broader Sensex and the sectoral index. The difference between both benchmarks (as a percentage of the Sensex) has come down to 27.5%, its lowest since the inception of the Bankex in 2002.
On Thursday, the BSE Bankex saw its highest single day gains in eight months of 3.3% (702 points) to scale a new peak of 22,023.30. The Sensex gained 2.7% to 28,075.55.
Private lenders, HDFC Bank, Kotak Mahindra Bank and Yes Bank also hit their respective new highs. While shares of HDFC Bank closed higher by 3.04%, Yes Bank gained 3.3%. Shares of country’s largest lender SBI advanced 5.02%, the biggest gainer among the index constituents. ICICI bank and Canara Bank followed the suit with 4-4.6%.
As they offered good value, the rally among banking stocks accelerated in early September 2013. Back then, the Bankex was trading at almost half of the Sensex value of 18234.66. Since then, the gauge of banking stocks doubled given that barring HDFC Bank, shares of all index members doubled investors’ wealth. During the period, stocks of Yes Bank, Axis Bank and Federal Bank surged more than three-fold. Shares of HDFC Bank clocked in a return of 76%.