CNX PSU Bank index hits fresh 52-week high

SBI, Bank of Baroda, Oriental Bank, Union Bank of India, BOI, PNB and IDBI Bank are up 2-5% on NSE.

Banking shares mainly public sector undertakings (PSU) are in demand with the National Stock Exchange (NSE) CNX PSU Bank index hits fresh 52-week high today.

State Bank of India (SBI), Bank of Baroda, Oriental Bank of Commerce, Union Bank of India, Bank of India, Punjab National Bank and IDBI Bank are up 2-5% on NSE.

Bank of Baroda (up 5% at Rs 1,139) and SBI (up 3% at Rs 328) touched their fresh 52-week highs.

At 1205 hours, CNX PSU Bank index was up 2.6% or 112 points at 4,415 as compared to 0.30% rise in the benchmark index CNX Nifty. The PSU bank index touched a high of 4,428, its highest level since May 2011, in intra-day trade today.

According to analysts at JP Morgan, the Finance Ministry circular on outside interference, splitting of Chairman and Managing Director (CMD) posts and strengthening of the boards should be significant measures to improve governance for the public sector banks.

Analysts remain positive on Indian banks as the tailwinds for the sector remain intact and valuations largely reasonable.

“In the near term, we expect catalysts from the three Rs. a) Results, boosted by bond gains for 3Q15E, b) Rates for loans and deposits should fall by 75-100bp in CY15 driven by the disinflationary impact of the oil/commodity price correction, and c) Reform – progress on the insurance bill and on PSU bank governance reform,” analysts said in a report dated January 12, 2015.