PSU banks rally on recap plans; add Rs 1.1 lakh cr to m-cap, PNB gains most

A day after Centre announced Rs 2.11 lakh cr recapitalisation plan, country's 21 listed state-run lenders added a combined Rs 1.12 lakh crore to their market value.

Punjab National Bank added Rs 13,590 crore to hit Rs 43,000 crore in market value, a 46.2% gain, the most in percentage terms.

RBI Governor Urjit Patel said in a statement that banks can use the capital for "immediate credit creation" and those that have "better addressed their balance sheet issues" could be given priority.

Credit Suisse raised state-run lenders to "a strong overweight position" from "underweight".

Morgan Stanley said the recapitalisation move is "extremely positive" for corporate lenders and upgraded State Bank of India to "overweight" from "underweight".

"Today's up move in the key indices was based on yesterday evening's announcement on PSU bank recapitalisation. The large PSU bank stocks were expected to rise from 20-40 per cent depending on the individual bank's capital adequacy and NPA levels and most of those stocks have risen in this band only," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"Even the maximum (trade) volume during the day so far (3.00 pm) of about Rs 49,000 crore on the NSE has been concentrated towards the banking counters and especially the large PSU bank counters."