The banking sector stocks are on a roll today, October 10. While SBI led the charts, all the stocks in Nifty Bank were trading in the green. SBI and Axis Bank were among the top five gainers in the Nifty 50.
The basket of banking stocks, Nifty Bank, was up 0.75% at 56,611.70, outperforming the benchmark indices.
The share price of SBI rose as much as 2.5% to Rs 883.75 on the National Stock Exchange. Punjab National Bank surged 2.5% to an intra-day high of Rs 117.20, while Axis Bank pulled up 2% to the day’s high of Rs 1,191.70.
On the technical front, Banknifty gave a breakout from the Inverted Head & Shoulder formation on the daily charts on Wednesday, October 06. “This sets up targets around 57,300-575,00 levels. Going ahead, we suggest traders adopt a buy on dips trading approach till it is trading above 55,850 levels on the closing basis,” said Vipin Kumar, Assistant Vice President of Technical and Derivatives Research at Globe Capital.
Here is a look at the 3 reasons why are bank stocks are soaring –
1. Guidelines for appointment of PSU Bank directors revised
The government, under the Appointments Committee of the Cabinet’s new framework, revised guidelines for the appointment of whole-time directors at public sector banks. The government, for the first time, opened SBI’s MD role for the private sector banks. Now, three of SBI’s four Managing Directors will be selected from public sector banks, while one may be chosen from the private sector.
2. FII buying
The Foreign Institutional Investors have turned buyers after 10 sessions of consecutive selling. The foreign buyers have been picking stocks for the last three trading days. They have bought equities worth Rs 2,830.1 crore in the past three sessions. However, they are still net sellers in October so far. “Domestically, there are indications of a trade deal between the US and India with India ‘rebalancing’ its oil purchases. These positive developments and the shift in FII strategy ( FIIs were buyers in the cash market in the last three trading days) bode well for the market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
3. Nifty Bank on an uptrend
Nifty Bank has surged 1.6% in the last five trading days. The index has given a return of 4% in the last one month and 11% in the past six months. The index moved a little in the last one year compared to the past six-month returns.