Banks replace IT as key drivers of markets

Analysts say gains in banking shares have been spurred by initial batch of earnings results

Banks are becoming the main drivers of Indian shares, with the NSE Bank index up 11.8% in October as of Friday's close, compared with a 7.7% gain for the broader Nifty.

That marks a second consecutive month of gains: the banking sub-index gained 6.3% in September after the central bank's move to ease short-term rates offset the impact from its hike in the repo rate last month.

Analysts say gains in banking shares have also been spurred by an initial batch of earnings results in the sector showing stable margins and asset quality that met expectations.

By contrast, gains in IT shares have been slower recently. The sector had been the key driver in markets.

The NSE IT Index has gained 8.1% so far this month, although the sub-index is still up 46.2% for the year compared with the 13.5% fall for banks.