PSU Bank index hits 52-week high; market-cap up by Rs 1.1 lakh crore

SBI, PNB, Canara Bank, Bank of India, Union Bank of India, Oriental Bank of Commerce and Bank of Baroda were up in the range 25% to 38% on the NSE

Nifty PSU Bank index hit a 52-week high of 3,980, surging 29% in intra-day trade on the National Stock Exchange (NSE) on strong rally in state-owned banks after the government cleared Rs 2.11 lakh crore bank recapitalisation plan.

The PSU bank index recorded its sharpest single day gain, was trading at its highest level since March 4, 2015. At 01:37 PM; the Nifty PSU Bank index was up 28% at 3,949, as compared to 0.78% rise in the benchmark Nifty50 index.

Punjab National Bank (PNB), Canara Bank, Bank of India and Union Bank of India were up more than 30% each. State Bank of India (SBI), Oriental Bank of Commerce and Bank of Baroda were up in the range of 25% to 30% on the NSE.

The combined market capitalization (market-cap) rose by over Rs 1-lakh crore in single day, post a huge rally in PSU Banks. India’s largest lender SBI and other PSU lenders in terms of market-cap added nearly Rs 1.10-lakh crore to stock investors’ wealth.

SBI added more than Rs 57,446 crore in its market-cap in Wednesday's session alone. PNB added Rs 11,225 crore, while Bank of Baroda (Rs 9,263 crore), Canara Bank (Rs 6,289 crore) and Bank of India (Rs 5,194 crore) added market-cap in the range of Rs 5,000 crore to Rs 10,000 crore.

Moody's Investors Service says that the  Indian government's (Baa3, Positive) announcement of a Rs 2.1 trillion recapitalization plan for public sector banks is a credit positive for the sector.

"The quantum of the plan is large enough to comprehensively address these banks' weak capitalization levels and is a significant credit positive as  weak capitalization is the main credit weakness for most rated public sector banks," says Srikanth Vadlamani, a Moody's Vice President and  Senior Credit Officer.

"For the 11 rated public sector banks, Moody's estimates that their external capital requirements over the next two years would be around Rs 700-950 billion, factoring in the two main drivers of their capital needs - the need to comply with Basel 3 requirements, and for  conservative recognition and provisioning of their asset quality problems," says Vadlamani.

"Thus, even if only the recapitalization bonds and the already announced budgetary support are factored in, the announced capital infusion by the government should be able to comfortably address the capital requirements of the public sector banks," says Vadlamani.

	Price on BSE in Rs			M-cap in Rs cr
Bank	24/10/2017	LTP	% chg	LTP	Gain
SBI	254.50	321.05	26.1	277,132	57,446
Punjab Natl.Bank	138.10	190.85	38.2	40,612	11,225
Bank of Baroda	143.15	183.35	28.1	42,247	9,263
Canara Bank	317.20	422.5	33.2	25,236	6,289
Bank of India	140.45	184.3	31.2	21,831	5,194
Union Bank (I)	131.35	172.05	31.0	12,498	2,957
IDBI Bank	54.30	65.15	20.0	17,216	2,867
Indian Bank	269.80	325.35	20.6	15,626	2,668
Central Bank	79.20	91.1	15.0	17,416	2,275
I O B	22.45	26.4	17.6	7,531	1,127
Syndicate Bank	72.25	84.5	17.0	7,643	1,108
Allahabad Bank	68.50	82.25	20.1	6,582	1,100
Oriental Bank	118.85	149.4	25.7	5,172	1,058
UCO Bank	30.20	35.8	18.5	6,683	1,045
Andhra Bank	58.50	68.95	17.9	6,018	912
Corporation Bank	39.15	46.95	19.9	5,385	895
Vijaya Bank	60.85	66.5	9.3	7,381	627
United Bank (I)	17.70	20.85	17.8	3,256	492
Bank of Maha	25.30	29	14.6	3,646	465
J & K Bank	73.90	82.05	11.0	4,569	454
Pun. & Sind Bank	46.45	52.75	13.6	2,112	252
Dena Bank	28.00	29.25	4.5	3,308	141
Total market-cap gain					109,861
LTP : Last traded price at 1:36 PM