Stocks in the banking sector firmed up today following good buying support charged by the psychological push with the peers Vysya Bank and Corporation Bank.
Shares of Federal Bank were up 16.35 per cent at Rs 55.85, UTI Bank was up 7.0 per cent at Rs 31, Bank of Baroda was up 7.31 per cent at Rs 41.85, Oriental Bank of Commerce was up 5.84 per cent at Rs 38.05, SBI was up 3 per cent at Rs 217.70 and shares of Bank of India were up 3.43 per cent at Rs 18.10.
Analysts said the rally in bank stocks was due to Vysya Bank hitting 20 per cent upper limit of the circuit breaker following the reports that ING subsidiary, Bank Brussels Lambert, was keen on raising its equity stake in the bank.
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The block deal by institutions on the Corporation Bank counter in afternoon trades also helped the sentiment towards these stocks.
Analysts said expectations of a recovery in the domestic economy, and the consequent rise in credit offtake are expected to strengthen bank bottomlines.
Also, there were hopes that foreign banks may raise their equity stake in Indian banks, especially in the private sector.
Meanwhile, an analyst said stocks of public sector banks have posted more gains, which indicates that the government may be keen to bring down its stake in state-run banks.
The rise is also attributed to the impressive December 2001 quarter results posted by various banks.
The State Bank of India, India's largest bank, had posted an impressive 179 per cent rise in its net profit to Rs 613.89 crore on total income of Rs 8,366.46 crore. Vysya Bank had recorded a net profit of Rs 22.40 crore, a rise of 145 per cent compared to the corresponding period in 2000.
The UTI Bank registered a 48.2 per cent rise in its net profit to Rs 35.76 crore on total income of Rs 394.04 crore.