Nifty Bank index hits 52-week high

Axis Bank, ICICI Bank, IndusInd Bank, HDFC Bank and SBI from Nifty Bank were up 1%-2% on the NSE

Banking shares were in the limelight with the Nifty Bank index hitting 52-week high on the National Stock Exchange (NSE) in an intra-day trade on Monday.

At 11:33 AM, Nifty Bank index was up 0.90% at 19,123.70 as compared to 0.42% rise in the Nifty 50 index. The banking index touched a 52-week high of 19,147.75, surpassing its previous of 52-week high of 19,103.70 on August 5, 2015 during intra-day trade. Since February 29, post Budget, the Nifty Bank index surged 37% against 23% rise in the benchmark index.

Nifty Bank represents the 12 most liquid and large capitalised stocks from the banking sector which trade on the NSE. It provides investors and market intermediaries a benchmark that captures the capital market performance of the Indian banking sector.

The Bombay Stock Exchange (BSE), S&P BSE Bankex was up 1% or 222 points at 21,943 against 0.59% rise on the S&P BSE Sensex. The BSE banking index hit an intra-day high of 21,950, nearly 23 points away from its 52-week high of 21,972.82 touched in August last year.

Axis Bank, ICICI Bank, IndusInd Bank, HDFC Bank and State Bank of India (SBI) from the Nifty Bank were up 1%-2%. Union Bank of India, IDFC Bank, Lakshmi Vilas Bank and Indian Bank were among non-index banking shares which rose 1%-4% each.

Among the individual stocks, Axis Bank was up nearly 2% at Rs 575 after the Reserve Bank of India on Friday, 15 July 2016, notified that Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) can now invest up to 74% from existing 62% of the paid up capital of the bank under the Portfolio Investment Scheme (PIS).

Meanwhile, Motilal Oswal Securities expects June quarter earnings of banks to come in better QoQ, as 2HFY16 earnings were marred by asset quality review (AQR)-related stress addition and provisioning.

While provision levels are likely to remain elevated (due to the lag impact of higher stress addition and focus on improving balance sheet health at the cost of profitability), we believe increased activity on monetization of non-core assets, reduction in cost of funds and bond gains are likely to support earnings, the brokerage firm said in a results preview.

The Indian government’s focus on fiscal discipline and addressing policy roadblocks, the RBI’s help to address stress issues in the system (S4A, SDR, 5:25 etc.) as well as banks’ intense efforts on recoveries and deleveraging of corporate balance sheets augur well for financials, in our view. Improving auto/CV sales, higher cement dispatches the RBI’s consumer confidence survey and higher activity in stalled projects point toward a gradual recovery, added report.