Bank Nifty Hits Record High at Open

On Friday, banking stocks opened with gains with the Bank Nifty hitting the 38000-mark for the first time after the government approved a Rs 30,600 crore guarantee programme for acquiring stressed loan assets, paving the way for operationalisation of bad bank.

Bank Nifty hit a fresh all-time high of 38045 points, up 0.85 per cent from the previous close. Shares of Central Bank of India gained 4 per cent, Indian Bank 3 per cent, Bank of India 3 per cent, and Indian Overseas Bank 2.5 per cent. Canara Bank, UCO Bank, State Bank of India, and Punjab National Bank were up 1-2 per cent. Indusind Bank, Kotak Mahindra Bank, ICICI Bank and Axis Bank were up 0.8-1.2 per cent.

“We view this as a positive development as the focus remains on faster resolution of stressed assets. This will improve the balance sheet of banks, and the upfront cash payment would also aid in providing incremental cash flows. It will enable banks to focus more on their core operations. PSU and private banks such as ICICI, Axis, and Yes Bank are likely to be the key beneficiaries,” said Motilal Oswal in a note to its investors.

The government said that the National Asset Reconstruction Company Ltd has already been incorporated and it will acquire stressed assets worth around Rs 2 trillion from various commercial banks in different phases. In the first phase, banks will transfer nearly Rs 90,000 crore of fully provided NPAs and the balance Rs1.1trn in the second tranche.

Stock Covered in the news

Canara Bank-View Detailed Analysis

State Bank of India-View Detailed Analysis

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