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Bank stocks gain on good credit growth, numbers

Our Bureau

Mumbai , April 23

BANKING sector stocks continued to rise, as the credit growth in the fourth quarter of 2003-04 was robust. The focus on the sector is also on expectation of good financial results by most of the banks in the fourth quarter.

The active buying in the bank stocks was seen from the rise in BSE's Bankex Index by 2.45 per cent at 3296.23 today. In comparison, BSE Sensex was almost flat in today's trading. The stocks in the sector have been attracting lot of attention in the last one month, mainly from FIIs. Bankex Index has gained 21.85 per cent in one-month period compared to 12.22 per cent by BSE 100 index, 13.59 per cent by BSE 200 and 14.94 per cent by BSE 500 index.

Mr Raamdeo Agarwal, Managing Director, Motilal Oswal Securities said, "Banking sector has witnessed huge growth in credit in the fourth quarter. Moreover, there has been growth in the mortgage and auto loans."

He said Indian consumer's borrowing has been low compared to countries such as the US, Japan and South Korea and the borrowing by India are likely to go up. "All this is good for the banking sector and their stocks."

Among the stocks that are on rise over the last few days are Bank of India, Canara Bank, UCO Bank, PNB and others. In today's trading, the stock price of PNB gained 7.28 per cent at Rs 384.85 on the BSE. Canara Bank gained 4.49 per cent at Rs 183.70, SBI closed at Rs 657.55 (up 0.26 per cent), UCO Bank closed at Rs 28.90 (up 1.58 per cent) and Jammu & Kashmir gained 2.75 per cent at Rs 515.15.

According to analysts, the bank stocks here are undervalued compared to banks in Asian Markets. "The rise in bank stocks is mainly due to FIIs seeing Indian bank stock as cheaper compared to other Asian bank stocks," said an analyst with a foreign broking firm.

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