Banking shares gain after Moody's revises India outlook

Kotak Mahindra Bank, PNB IndusInd Bank, BOI, YES Bank, Axis Bank, BOB, ICICI Bank and Canara Bank up 2%-5% on the NSE.

Banking shares were trading higher up to 5% on the bourses after Moody's Investors Service changed India's outlook to 'positive' from 'stable' earlier and affirmed 'Baa3' credit rating on Thursday.

Kotak Mahindra Bank has rallied 5% to Rs 1,439, while Punjab National Bank (PNB) gained 4% at Rs 159 on the National Stock Exchange (NSE). IndusInd Bank, Bank of India, YES Bank, Axis Bank, Bank of Baroda, ICICI Bank and Canara Bank up 2% to 3%.

At 1211 hours, Bank Nifty was up 2% or 359 points at 18,776 compared with 0.22% rise in the CNX Nifty.  The banking share index hit a high of 18,780, bouncing back 379 points from intra-day low of 18,401 touched in early morning trade.

Moody's Investors Service  in a statement said that the decision to revise the ratings outlook to positive from stable is based on its view that there is an increasing probability that actions by policy makers will enhance the country's economic strength and, in turn, the sovereign's financial strength over coming years.

Meanwhile, the rating agency has affirmed the long-term ratings and changed the outlook to positive from stable for 12 Indian government-owned financial institutions.