Banking stocks zoomed by about 7% in early morning trade as the US Federal Reserve announced its intention to leave its stimulus programme intact.
Analysts said that the move by Fed is expected to benefit banks the most on account of foreign currency loans taken by them.
"In the past 15 months or so, banks had taken huge exposure in terms of dollar loans from the external market. The continuing of the QE3 stimulus programme would mean higher demand for banking papers in the external market," said G Chokkalingam,
MD & CIO, Centrum Broking.
Analysts said that with the QE3 continuing as it is, foreign flows would likely continue helping to stabilise the rupee further. That would also mean that there will be no currency impact on the dollar loans taken by banks.
"These stocks have also moved up ahead of the RBI policy announcement tomorrow which is likely to be conducive for the sector," added Chokkalingam.
The rise in banking stocks was led by Yes Bank, which was up 16% followed by IndusInd Bank which was up 11%. The rest of the BSE Bankex stocks were up in the 5-7% range.
The US Fed Chairman at midnight, Indian time, announced that they would leave the $85 billion bond-buying programme intact, putting to rest months of speculation that it would reduce the programme by $10 billion.
Markets globally rallied post the announcement, including Dow Jones and NASDAQ, which touched all-time high.
The BSE Sensex and NSE Nifty were trading up 3% in early morning trade on Thursday.
Analysts said that the move by Fed is expected to benefit banks the most on account of foreign currency loans taken by them.
"In the past 15 months or so, banks had taken huge exposure in terms of dollar loans from the external market. The continuing of the QE3 stimulus programme would mean higher demand for banking papers in the external market," said G Chokkalingam,
MD & CIO, Centrum Broking.
Analysts said that with the QE3 continuing as it is, foreign flows would likely continue helping to stabilise the rupee further. That would also mean that there will be no currency impact on the dollar loans taken by banks.
"These stocks have also moved up ahead of the RBI policy announcement tomorrow which is likely to be conducive for the sector," added Chokkalingam.
The rise in banking stocks was led by Yes Bank, which was up 16% followed by IndusInd Bank which was up 11%. The rest of the BSE Bankex stocks were up in the 5-7% range.
The US Fed Chairman at midnight, Indian time, announced that they would leave the $85 billion bond-buying programme intact, putting to rest months of speculation that it would reduce the programme by $10 billion.
Markets globally rallied post the announcement, including Dow Jones and NASDAQ, which touched all-time high.
The BSE Sensex and NSE Nifty were trading up 3% in early morning trade on Thursday.