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PSU Bank index hits 52-week high; market-cap up by Rs 1.1 lakh crore

SBI, PNB, Canara Bank, Bank of India, Union Bank of India, Oriental Bank of Commerce and Bank of Baroda were up in the range 25% to 38% on the NSE

SI Reporter  |  Mumbai 

Bank recapitalisation stares at Sebi hurdles

index hit a 52-week high of 3,980, surging 29% in intra-day trade on the National Stock Exchange (NSE) on strong rally in state-owned banks after the government cleared Rs 2.11 lakh crore bank plan.

The PSU bank index recorded its sharpest single day gain, was trading at its highest level since March 4, 2015. At 01:37 PM; the index was up 28% at 3,949, as compared to 0.78% rise in the benchmark Nifty50 index.

Punjab National Bank (PNB), Canara Bank, Bank of India and Union Bank of India were up more than 30% each. State Bank of India (SBI), Oriental Bank of Commerce and Bank of Baroda were up in the range of 25% to 30% on the NSE.

The combined market capitalization (market-cap) rose by over Rs 1-lakh crore in single day, post a huge rally in PSU Banks. India’s largest lender and other PSU lenders in terms of added nearly Rs 1.10-lakh crore to stock investors’ wealth.

added more than Rs 57,446 crore in its in Wednesday's session alone. added Rs 11,225 crore, while Bank of Baroda (Rs 9,263 crore), Canara Bank (Rs 6,289 crore) and Bank of India (Rs 5,194 crore) added in the range of Rs 5,000 crore to Rs 10,000 crore.

Moody's Investors Service says that the  Indian government's (Baa3, Positive) announcement of a Rs 2.1 trillion recapitalization plan for public sector banks is a credit positive for the sector.

"The quantum of the plan is large enough to comprehensively address these banks' weak capitalization levels and is a significant credit positive as  weak capitalization is the main credit weakness for most rated public sector banks," says Srikanth Vadlamani, a Moody's Vice President and  Senior Credit Officer.

"For the 11 rated public sector banks, Moody's estimates that their external capital requirements over the next two years would be around Rs 700-950 billion, factoring in the two main drivers of their capital needs - the need to comply with Basel 3 requirements, and for  conservative recognition and provisioning of their asset quality problems," says Vadlamani.

"Thus, even if only the recapitalization bonds and the already announced budgetary support are factored in, the announced capital infusion by the government should be able to comfortably address the capital requirements of the public sector banks," says Vadlamani.

  Price on BSE in Rs   M-cap in Rs cr
Bank 24/10/2017 LTP % chg LTP Gain
SBI 254.50 321.05 26.1 277,132 57,446
Punjab Natl.Bank 138.10 190.85 38.2 40,612 11,225
Bank of Baroda 143.15 183.35 28.1 42,247 9,263
Canara Bank 317.20 422.5 33.2 25,236 6,289
Bank of India 140.45 184.3 31.2 21,831 5,194
Union Bank (I) 131.35 172.05 31.0 12,498 2,957
IDBI Bank 54.30 65.15 20.0 17,216 2,867
Indian Bank 269.80 325.35 20.6 15,626 2,668
Central Bank 79.20 91.1 15.0 17,416 2,275
I O B 22.45 26.4 17.6 7,531 1,127
Syndicate Bank 72.25 84.5 17.0 7,643 1,108
Allahabad Bank 68.50 82.25 20.1 6,582 1,100
Oriental Bank 118.85 149.4 25.7 5,172 1,058
UCO Bank 30.20 35.8 18.5 6,683 1,045
Andhra Bank 58.50 68.95 17.9 6,018 912
Corporation Bank 39.15 46.95 19.9 5,385 895
Vijaya Bank 60.85 66.5 9.3 7,381 627
United Bank (I) 17.70 20.85 17.8 3,256 492
Bank of Maha 25.30 29 14.6 3,646 465
J & K Bank 73.90 82.05 11.0 4,569 454
Pun. & Sind Bank 46.45 52.75 13.6 2,112 252
Dena Bank 28.00 29.25 4.5 3,308 141
           
Total gain       109,861
           
LTP : Last traded price at 1:36 PM

First Published: Wed, October 25 2017. 13:46 IST
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