PSU banks recover from day's low; Nifty PSU bank index up 1%

SBI, BOB, Vijaya Bank, BOI, Corporation Bank, Uco Bank and Union Bank recovered more than 2% each from intra-day lows

Shares of select public sector undertaking (PSU) banks were trading higher in late noon trade, recovering from their intra-day lows on the National Stock Exchange (NSE).

State Bank of India (SBI), Bank of Baroda (BOB), Bank of India (BOI), Union Bank of India and Oriental Bank of Commerce were up 1% to 3% on the NSE.

At 03:07 pm, Nifty PSU Bank index was up 1.2% at 3,200, recovering 2.7% from intra-day low of 3,115. On comparison, Nifty50 and Nifty Bank index were down 0.87% and 1.5%, respectively.

SBI, BOB, Vijaya Bank, BOI, Corporation Bank, Uco Bank and Union Bank of India have recovered more than 2% each from their respective intra-day lows.

Moody's Investors Service says that the move by the Government of India (Baa3 positive) to withdraw all Rs 500 and 1,000 notes -- approximately 86% of all outstanding notes -- is affecting all sectors of the economy to various extents, with banks being the key beneficiary.

Banks would benefit significantly from a move towards digital payments, given their role as intermediaries for such transactions. In addition, rising bank deposits -- which Moody's expects to increase by 1%-2% as a result of the demonetization -- could lower lending rates, a positive for the banks.

In the nearer term, however, Moody's expects asset quality to deteriorate for banks and non-bank finance companies, as the economic disruption will significantly impact the ability of borrowers to repay loans, in particular in the loans against property, commercial vehicle and micro finance sectors.

In the longer term, like banks and corporates, Moody's expects the reduced reliance on cash in the Indian economy will benefit auto ABS transactions, because it will reduce the need for high-touch servicing, increase the predictability of payment collections and improve the ability of lenders to assess borrowers' credit profiles.

COMPANY	DAY'S LOW(RS)	DAY'S HIGH(RS)	LATEST(RS)	RISE(%)
BANK OF BARODA	158.50	168.65	167.15	5.46
VIJAYA BANK	42.80	45.45	45.05	5.26
BANK OF INDIA	115.50	120.55	119.50	3.46
UNION BANK (I)	146.30	152.35	150.95	3.18
CORPORATION BANK	43.70	45.50	45.05	3.09
UCO BANK	32.15	33.70	33.10	2.95
ST BK OF MYSORE	545.00	562.45	560.30	2.81
ST BK OF INDIA	254.55	263.00	261.60	2.77
ORIENTAL BANK	115.70	123.90	118.80	2.68
ST BK OF BIKANER	693.30	714.95	711.40	2.61
S B T	546.25	562.95	560.00	2.52
DENA BANK	33.50	34.50	34.25	2.24
BANK OF MAHA	28.60	29.40	29.15	1.92
PUNJAB NATL.BANK	135.00	139.10	137.50	1.85
CANARA BANK	301.00	308.45	305.00	1.33