Bank stocks jump on reports PM to fix power sector debt issue

Bank stocks edged higher on reports that the Prime Minister will hold talks with the chiefs of state government-run electricity utilities today, 14 September 2015, on a rescue package for the beleaguered power transmission and distribution sector.

Among state-run banks, Union Bank of India (up 3.34%), Andhra Bank (up 3.20%), IDBI Bank (up 3.12%), Canara Bank (up 2.99%), Syndicate Bank (up 2.95%), Bank of Baroda (up 2.82%), Bank of India (up 2.76%), UCO Bank (up 2.42%), Central Bank of India (up 2.24%), Corporation Bank (up 2.19%), State Bank of India (up 2.13%), Allahabad Bank (up 1.99%), United Bank of India (up 1.92%), Bank of Maharashtra (up 1.89%), Punjab National Bank (up 1.82%), Punjab and Sind Bank (up 0.98%) and Vijaya Bank (up 0.14%), edged higher. Indian Bank (down 0.44%) and Dena Bank (down 0.98%), edged lower.

Among private sector banks, Axis Bank (up 2.96%), Yes Bank (up 2.72%), Kotak Mahindra Bank (up 2.30%), ICICI Bank (up 1.70%), HDFC Bank (up 1.01%), Federal Bank (up 0.91%) and IndusInd Bank (up 0.66%), edged higher. City Union Bank was down 0.48%.

The BSE Bankex was up 1.78% at 19,332.50. It outperformed the S&P BSE Sensex, which was up 0.88% at 25,835.89.

The BSE Bankex had underperformed the market over the past one month till 11 September 2015, falling 11.06% compared with 8.10% fall in the Sensex. The index had also underperformed the market in past one quarter, falling 4.36% as against Sensex's 2.88% decline.

According to media reports, Prime Minister Narendra Modi is set to meet bosses of loss-making state government-run electricity utilities today, 14 September 2015, to debate a rescue package for the power transmission and distribution sector. According to reports, the government has identified weak financials and high debt of state-government run electricity utilities as the key obstacles for the growth of the power sector in the country. According to reports, Indian banks have outstanding loans aggregating Rs 53000 crore to state-government run electricity utilities and there is a risk of majority of these loans turning into bad loans.

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