Bank Nifty surges nearly 400 points

SBI, BOI, ICICI Bank, BOB, YES Bank, Oriental Bank, PNB and Union Bank are up 3-4% on NSE.

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Banking shares are trading higher by up to 4% on the bourses after the government estimated India’s economic growth this financial year to soar 7.4% under new methodology.

State Bank of India (SBI), Bank of India, ICICI Bank, Bank of Baroda, YES Bank, Oriental Bank of Commerce, Union Bank of India and Punjab National Bank are up 3-4% on the National Stock Exchange (NSE). IndusInd Bank, Canara Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank are up 1-2%.

At 1055 hours, Bank Nifty was the largest gainer among sectoral indices, up 2.1% or 392 points at 18,796 as compared to 0.84% rise in the benchmark CNX Nifty. The banking share index hit a high of 18,831 during intra-day trade.

The government on Monday estimated India’s economic growth this financial year at 7.4%, against 6.9% in 2013-14, as the country changed its definition of gross domestic product (GDP) and the base year for calculating it, the Business Standard report suggests.

"Based on this performance, it does look like the Budget will target growth of 7.5-8% in its calculations for FY16, as the policy measures adopted and stable economic conditions will facilitate such growth next year," said Madan Sabnavis, chief economist of CARE Ratings.

“The Union Budget may consider some measures to revive investment, particularly in the sectors which are experiencing slowdown. Further, the data shows significant moderation in inflation as measured by the GDP deflator, which should provide comfort to the RBI in reducing interest rates to a much greater extent,” said Mr. Chandrajit Banerjee, Director General, CII.