The Hindu Business Line : Banking stocks rise on advance tax payment figures

Mumbai, June 17 Banking stocks gained the most in Tuesday’s market rally as the index was up 311 points or 4.29 per cent from its previous close. All the stocks that make up the BSE Bankex index ended the day in the green.

ICICI Bank, HDFC Bank and SBI were among the top gainers of the day.

ICICI Bank was up 2.7 per cent, HDFC Bank (4.87 per cent) and SBI (4.57 per cent).

The other banking stocks that gained today include Axis Bank (7.89 per cent), Bank of Baroda (5.87 per cent), Canara Bank (5.34 per cent), Bank of India (5.92 per cent), Kotak Bank (7.45 per cent) and Union Bank of India (5.08 per cent).

The main reason for these stocks to do well today is because of the advance tax payment figures of both SBI and ICICI Bank, said analysts.

“With the higher-than-expected advance tax payment figures, it shows that the banks still have good earnings and it also gives a sort of assurance to the investors that things are not that negative with the sector,” said a banking analyst with a brokerage.

Inflation concern

Marketmen also say that banks may increase their deposit rates in order to make them more attractive as there are concerns regarding inflation touching double digits and also likely hike in interest rates.

Another reason why the banking stocks surged today, say analysts, is due to the fact that they are among the most over-sold. Until Monday, the BSE Bankex has been the worst hit, ever since the farm loan waiver was announced in this year’s Union Budget. From its high in January, the banking index has shed more than 47 per cent. In the last one month alone, the banking index has shed 15 per cent.

Oversold Situation

“The valuations in this sector look very attractive now, as there has been a lot of correction in the three and a half months, due to various reasons. Most of these stocks last week hit their 52-week lows. There was quite a bit of value buying in the banking sector stocks today,” said Ms Anita Gandhi, Head of Institutional Business at Arihant Capital Markets.

“Beaten down sectors like banking, infrastructure, realty and capital goods were in good demand today. Due to oversold situation of these sectors, the uptrend is still intact in these sectors until Wednesday noon session,” said Mr Alex Mathew, Head-Research Centre, Geojit Financial Services. It was announced after the trading hours on the BSE that two new stocks would be included in the BSE Bankex from July 28. IDBI Bank and IndusInd Bank would be included while Andhra Bank would be excluded from the index.

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