Shares of PSU banks rallied on Wednesday, giving a lift to the benchmark indices. UCO Bank and Union Bank of India led the gains, jumping over 8% each, with Central Bank, Bank of India, and Indian Overseas Bank climbing between 6% and 7%.
The Sensex gained 346.37 points or 0.6% to close at 57,960.09, while the Nifty50 rose 129 points or 0.76% to close at 17,080.70.
Private banks, too, gained for the day, with ICICI Bank and South Indian Bank the only ones to end in the red. The slump in South Indian Bank shares followed managing director Murali Ramakrishnan’s decision to turn down the offer for reappointment.
The BSE Bankex
“Markets have been oversold, which has led to a decline in prices. Investors have been booking short-term losses. Globally, things are stabilising with respect to the banking crisis abroad, and from a sentiment perspective market players are slightly positive on the sector,” said Pankaj Pandey, head of research at ICICI Securities.
Pandey said the overall sentiment has been weak for the major part of the year so far, which explains the underperformance on a YTD basis, explaining that banks are facing challenges on an individual level too.
“The divergence identified by the RBI in City Union’s additional gross NPA has affected the lender. In the case of DCB, there have been talks of the lender seeking to expand its balance sheet, which implies higher future costs,” he added.
The Bank Nifty