The Bank Nifty hit the 35,000-mark for the first time in the afternoon after adding half a percent on February 4 in a flat market. The index has surged over 13 percent since February 1, when Finance Minister Nirmala Sitharaman presented the Union Budget for the year 2021-22.
At 1246 hours, the index was trading with half a percent gains at 34941.90 level.
The stocks that are pulling the index higher include Federal Bank and Bank of Baroda, which jumped 4 percent each followed by PNB, Kotak Mahindra Bank, IDFC First Bank, Bandhan Bank and State Bank of India.
PNB was the most active stock on NSE in terms of volumes with 18,50,70,788 shares being traded followed by Yes Bank (6,56,08,978) and Bank of Baroda where 4,90,89,889 shares were traded.
Finance Minister Nirmala Sitharaman on February 1 announced plans to set up a new asset reconstruction company (ARC) and asset management company (AMC) as part of a strategy to clean up banks’ balance sheets.
Announcing its version of the “bad bank”, the government will set up an ARC to take over bad loans. The existing stock of bad loans is a big worry for banks. At the end of September last year, the total gross NPAs of the banking system was 7.5 percent of the overall industry loan book.
Also Read: Nifty Bank rallies over 10% post Budget: Here are 5 reasons why the index is rising
Experts are of the view that the financials are clearly one sector which investors can go overweight on, especially after the Budget 2021, which focused on driving growth in the economy.
“Setting of Stressed Asset Fund and Privatization of PSU banks will be a great positive for the ecosystem. The merging of PSU banks was a step in this direction and now with privatization of PSU, it will help in encouraging new players with a proven track record to boost better productivity and lending practices,” Vijay Kuppa, Co-Founder, Orowealth told Moneycontrol.
“Further recapitalisation of R s200 billion is proposed in FY22 – this is at lower end of expectations of Rs200-400 billion. It was expected that after the infusion of Rs 3.16 trillion in the last five years in PSU banks, this year it would be set lower in the range of Rs200-400bn,” ICICIdirect said in a note.
JM Financial is positive on ICICI Bank, HDFC Bank, and State Bank of India among large-caps in the banks and financial space, while ICICI direct is positive on Axis Bank and SBI.
Brokerage firm Motilal Oswal has picked ICICI Bank, SBI, Axis Bank, and AU Small Finance Bank as top picks.
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