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Bank stocks rose on Tuesday following a surprise cut in the government's borrowing programme for the fiscal year starting April. Nifty PSU Bank index jumped as much as 2.2 per cent, while Nifty Private Bank index gained as much as 1.2 per cent.
The government plans to borrow Rs 2.88 lakh crore ($44.46 billion) during April-September, the government had said after market hours on Monday, adding it will borrow Rs 50,000 crore less for the full year 2018/19.
Lower borrowing number helps in trimming bond trading losses which was a big drag for banks’ performance in addition to bad loan provisioning.
IDBI Bank Ltd rose as much as 4.9 per cent, while State Bank of India and Bank of Baroda Ltd were up over 1.2 per cent each. Private lenders such as Axis Bank Ltd and RBL Bank Ltd were trading over 2 per cent higher.
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