Bank stocks lead rally

Bank stocks led rally on the bourses, with the barometer index, S&P BSE Sensex, and the Nifty 50 index, both, hitting their highest level in more than a week. At 12:16 IST, the Sensex was up 428.72 points or 1.69% at 25,734.19. The gains for the Nifty 50 index were higher in percentage terms than those for the Sensex. The Nifty was currently up 139.75 points or 1.80% at 7,888.60. Gains in global stocks aided the upmove on the domestic bourses.

The rally on the domestic bourses was further aided by a foreign brokerage upgrading the Indian equity market to 'overweight' from 'equalweight'. According to media reports, the brokerage has cited attractive valuations of Indian stocks compared with other emerging markets, the country's strong macroeconomic fundamentals, a recovery in earnings growth, prospects for the passage of the goods and services tax (GST) bill in the Rajya Sabha, expectation of good monsoon this year and likely further easing of interest rates by the Reserve Bank of India (RBI) as reasons for upgrading India's rating.

The Sensex jumped 449.55 points, or 1.78% at the day's high of 25,755.02 in early afternoon trade, its highest level since 17 May 2016. The index rose 125.12 points, or 0.49% at the day's low of 25,430.59 in early trade. The Nifty rose 144.75 points, or 1.87% at the day's high of 7,893.60 in early afternoon trade, its highest level since 17 May 2016. The index rose 60.45 points, or 0.78% at the day's low of 7,809.30 in early trade.

The broad market depicted strength. There were nearly two gainers against every loser on BSE. 1,485 shares rose and 760 shares fell. A total of 138 shares were unchanged. The BSE Mid-Cap index was currently up 0.96%. The BSE Small-Cap index was currently up 0.93%. Both these indices underperformed the Sensex.

In overseas stock markets, Asian equities edged higher after encouraging reports on the US housing market saw sharp gains in US stocks overnight. Sales of new homes in the US surged 16.6% in April 2016, the fastest pace of increase in more than eight years, data released yesterday, 24 May 2016, showed. European stocks registered strong gains yesterday, 24 May 2016, after a poll showed a 13-point lead in support among Britons to stay in the European Union (EU) over their rivals who support UK's exit from the EU. Britons will vote on 23 June 2016 on whether the country should remain a member of the EU.

Banks stocks edged higher on renewed buying. Among PSU banks, UCO Bank (up 4.72%), Canara Bank (up 4.27%), Union Bank of India (up 2.58%), Punjab National Bank (up 2.36%), State Bank of India (up 2.33%), Andhra Bank (up 2.32%), Bank of Baroda (up 2.19%), Allahabad Bank (up 1.91%), Syndicate Bank (up 1.83%), IDBI Bank (up 1.64%), Dena Bank (up 1.60%), Central Bank of India (up 1.25%), United Bank of India (up 1.17%), Corporation Bank (up 1.01%), Vijaya Bank (up 1%), Indian Bank (up 0.89%), Punjab and Sind Bank (up 0.77%) and Bank of Maharashtra (up 0.72%), edged higher.

Bank of India shrugged off the announcement of a massive net loss from the state-run bank for Q4 March 2016. The stock was up 3.48%. The bank reported a net loss of Rs 3587.09 crore in Q4 March 2016, higher than net loss of Rs 56.14 crore in Q4 March 2015. The bank's total income fell 7.3% to Rs 11384.91 crore in Q4 March 2016 over Q4 March 2015. The bank's gross non-performing assets (NPAs) stood at Rs 49879.13 crore as on 31 March 2016 as against Rs 36519.14 crore as on 31 December 2015 and Rs 22193.24 crore as on 31 March 2015. The ratio of gross NPAs to gross advances stood at 13.07% as on 31 March 2016 as against 9.18% as on 31 December 2015 and 5.39% as on 31 March 2015. The ratio of net NPAs to net advances stood at 7.79% as on 31 March 2016 as against 5.25% as on 31 December 2015 and 3.36% as on 31 March 2015. The bank's provisions and contingencies rose 142.5% to Rs 5470.36 crore in Q4 March 2016 over Q4 March 2015. The result was announced after market hours yesterday, 24 May 2016.

Among private sector banks, ICICI Bank (up 3.88%), Axis Bank (up 2.08%), Federal Bank (up 1.82%), Kotak Mahindra Bank (up 1.69%), HDFC Bank (up 1.50%) and Yes Bank (up 1.47%), edged higher. City Union Bank was down 1.15%.

Induslnd Bank was up 3.58% after the private sector bank and Lohia Auto Industries signed a Memorandum of Understanding (MoU) whereby Induslnd Bank will be the preferred financier for financing Lohia Auto's diesel three wheelers. Through this partnership Induslnd bank will offer retail finance at an attractive rate of interest for all Lohia 3-wheeler models. The loan facility will be available in almost in every part of the country. The announcement was made during trading hours today, 25 May 2016.

Auto stocks rose across the board. Ashok Leyland (up 2.75%), Maruti Suzuki (India) (up 2.45%), Tata Motors (up 1.99%), Escorts (up 1.49%), Bajaj Auto (up 1.15%), Hero MotoCorp (up 1.10%), Eicher Motors (up 1.08%), Mahindra & Mahindra (up 0.79%) and TVS Motor Company (up 0.70%), edged higher.

VRL Logistics slumped 8.71% to Rs 287.65, with the stock extending a rout during the previous trading session triggered by the announcement that the company's promoters may dilute a portion of their stake in the company to fund their proposed airline venture. The stock had tumbled by its maximum permissible level of 20% to settle at Rs 315.10 yesterday, 24 May 2016. The promoters have assured the company's board of directors that they will continue to hold a majority stake in the company. Vijay Sankeshwar and Anand Sankeshwar held 34.84% and 34.27% stake respectively in VRL Logistics as on 31 March 2016.

Amara Raja Batteries edged lower after the company reported a muted growth in bottom line in Q4 March 2016. The stock was off 5.02%. The company's net profit rose 6.19% to Rs 108.60 crore on 9.56% rise in total income to Rs 1179.39 crore in Q4 March 2016 over Q4 March 2015. The result was announced before market hours today, 25 May 2016.

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