PSU banks extend rally, BOI surges over 30% in two days

CNX PSU Bank index has rallied almost 12% in past two trading sessions as compared to 1% gain in benchmark CNX Nifty.

Shares of public sector undertaking (PSU) banks continue at their upward march, trading higher by up to 12% second day in a row on the National Stock Exchange (NSE). The NSE state-owned bank index CNX PSU Bank has surged 4.4% as compared to 0.30% rise in benchmark CNX Nifty and 1.26% gain in Bank Nifty at 1125 hours.

CNX PSU Bank index has rallied almost 12% in past two trading sessions to 2,591 from 2,311 on Wednesday, after select banks reported better-than-expected earnings for the quarter ended September 2013 (Q2).

Corporation Bank, Oriental Bank of Commerce, Bank of India, Dena Bank, Indian Bank, Union Bank of India, Punjab National Bank, Bank of Baroda, Andhra Bank and Canara Bank are up 6-12%, while Syndicate Bank, Indian Overseas Bank, Allahabad Bank, IDBI Bank and State Bank of India are trading higher by 3-5% on NSE.

Bank of India has surged by 10% at Rs 230 today. The stock has rallied 33% from Rs 173 in past two trading sessions on reporting better than expected numbers both on the operating as well as on the asset quality front.

On the asset quality front, not only did the bank witness sequentially lower slippages (slippages rate of 2% as compared to 2.8% in previous quarter), but they also reported much better recoveries and upgrades performance (around Rs 900 crore as compared to Rs 700 crore in 1QFY2014 and average quarterly run-rate of Rs 500 crore over last four quarters), says analyst at Angel Broking in a note.

Allahabad Bank has gained 19% in past two days after reported a better than expected net profit at Rs 276 crore in Q2 against an average analyst estimate of Rs 243 crore. The bank’s net NPA ratio declined to 3.83% from 3.87% in previous quarter.