Banking stocks advanced for the second consecutive session on Friday, led by public sector banks, (PSBs) as the Street reacted to the government’s plan to set-up a high-level panel in dealing with rising bad loans.
The Bank Nifty rose almost 2% or 334.40 points at 17370.95, with all 12 index constituents ending in the green. State-owned lender Bank of Baroda (BoB) surged 5.5%, while Punjab National Bank (PNB) advanced 3%. Both the stocks have risen 12% in the last one month, exchange data showed.
The country’s largest lender by assets, State Bank of India (SBI), gained nearly 3%. Syndicate Bank surged 5.23%, while Allahabad Bank and IDBI Bank rose 3-4% each.
Private sector lenders also ended in the green, tracking the positive momentum in PSBs. Shares of ICICI Bank, HDFC Bank, Axis Bank, Kotak Bank and YES Bank ended up in the 1.5-2.5% range.
“NPA is a matter of concern and the government is vigilant in this regard. The government is looking into the problems faced by steel, aluminium and textile sectors,” said Anjuly Chib Duggal, secretary at the Department of Financial Services.
“That was discussed at the meeting of the finance minister with the heads of PSU banks. It’s too early to get into specifics…it will certainly have a more focused look on certain sectors,” Duggal said, when asked if a panel on NPAs, which is likely to be headed by minister of state for finance Jayant Sinha, was in the offing.
The gross NPAs of public sector banks rose to 6.03% at the end of June 2015, against 5.20% in March 2015. Metal and textile sectors have a high share of total NPAs of public sector banks.
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