Jan 22: The banking stocks had a bullish run recently with both Bank Nifty and BSE Bankex recording strong gains last week thanks to some good Q3 results and government resolve to help the public sector banks saddled with high non-performing assets. It may be recalled that BSE Bankex had ralled 40% last year.
On Monday afternoon, Bank Nifty was trading up 0.06% at 26926.95 gaining close to 5% on a weekly basis,
HDFC Bank became the first Indian bank to cross the Rs 5 lakh crore market capitalisation mark while Yes Bank’s net profit rose 22% to Rs 1,077 cr in December quarter and earnings per share rose to Rs 4.61 per share. The bank’s NPA’s had dropped to 1.72% from 1.82% due to recoveries and repayments.
Shares of public sector State Bank of India were trading range bound on a weekly basis at 302 to 317 levels while Canara Bank also traded in 335 to 366 range while Punjab National Bank traded in with rising volume of trade in 162.65 to 182.75 range.
The recent gains in Sensex were aided by the uptrend in Kotak Mahindra Bank, Yes Bank, ICICI Bank and HDFC Bank.
Government is contemplating on allowing 100% foreign direct investment (FDI) in private banks and up to 49% in public sector banks.
Despite the positive news on the banking sector, some analysts maintain caution on buying in this domain just based on speculation. The Union Budget for 2018-19 is expected to throw some light on how the government plans to implement the reform measures for banking sector including the implementation of bankruptcy laws, insolvency, digital payments and also bringing clarity on digital currencies.
Analysts said that 2017 was eventful for the finance sector in general with implementation of GST and Insolvency and Bankruptcy Code (IBC).