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Shares of state-run banks rally as Q1 results have stoked optimism about lenders' asset quality.
The gains come a day ahead of the central bank’s policy review when it is expected to keep the key rates unchanged.
Bank of Baroda rallied 6 per cent, IDBI Bank was up 3.8 per cent, while State Bank of India rose 3.5 per cent.
Canara Bank was up 3.2 per cent, Union Bank 3.2 per cent higher, and Indian Bank surged 6 per cent.
Rather than rate cut hopes, stocks rallied as asset quality pressures seemed to have peaked, analysts said.
The most encouraging trend from the Q1 results of state-run banks is the moderation in formation of new stress loans, CLSA said.
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