PSU banks gain for second straight day; Corp Bank, Bank of India up over 3%

Nifty PSU Bank index was up 1.3% at 2,919 at 09:24 am, rallying 6% from its Tuesday's intra-day low level of 2,747.

Shares of public sector undertaking (PSU) banks were in focus on Wednesday, with Nifty PSU Bank index gaining 1% and extending its 2.6% gain in the previous session, on hopes of relaxation of Prompt Corrective Action (PCA) norms for the state-owned banks. The government appointed Shaktikanta Das as the new governor of the Reserve Bank of India (RBI) on Tuesday after market hours.

Corporation Bank, Bank of Maharashtra, United Bank of India, Indian Overseas Bank, Dena Bank, Bank of India, Central Bank of India and UCO Bank were up in the range of 3% to 6% on the National Stock Exchange (NSE).

At 09:24 am; Nifty PSU Bank index was up 1.3% at 2,919, as compared to 0.65% rise in the Nifty 50 index. The index has rallied 6% from its Tuesday’s intra-day low level of 2,747.

Urjit Patel unexpectedly resigned as RBI governor on Monday, citing personal reasons, following months of bickering between the regulator and the government over autonomy and the central bank’s hard line on cleaning up the financial system.

“Bankers and financial industry captains who have been having a tough time with the RBI governor’s strong stance on prudential measures are now hoping that the new central bank leadership may turn a bit more sympathetic and receptive to industry's demand,” IIFL Securities said in a client note.

The government has been seeking the relaxation of PCA norms for PSU banks, which if relaxed, would be positive for those banks.

“There are four major areas where the government and the RBI need to find a common ground the proposal to use the RBI’s balance sheet to recapitalize public sector banks, easing norms for banks under the (PCA) mechanism, additional liquidity window for NBFCs and setting up of an independent regulator for payment systems outside the RBI,” Motilal Oswal Securities said in a client note.

Meanwhile, shares of private sector banks, non-banking financial companies (NBFCs), housing finance company (HFCs) and microfinance institutions (MFIs) were too trading higher for the second day in a row by up to 5% on the BSE on hopes of improving liquidity situation.

Shriram Transport Finance, Indiabulls Housing Finance, Dhanlaxmi Bank, YES Bank, PNB Housing Finance, Can Fin Homes, Repco Home Finance, Dewan Housing Finance Corporation (DHFL), Mahindra & Mahindra Financial Services, Equitas Holdings and LIC Housing Finance were up in the range of 2% to 5% on the BSE. 

“We believe the impact will be particularly pronounced for wholesale financiers. HFCs with better parentage and higher share of pure retail home loans would have easier access to debt capital, in our view. Also, vehicle financiers have better pricing power, and thus, should be able to largely manage spreads in this environment. The RBI and government have been taking steps to improve the situation, which should address investor concerns,” it added.

COMPANY	LATEST	PREV CLOSE	GAIN(%)
CORPORATION BANK	29.10	27.45	6.01
INDIABULLS VENT.	358.40	338.70	5.82
LAK. VILAS BANK	91.25	86.80	5.13
BANK OF MAHA	13.26	12.64	4.91
INDIABULLS HOUS.	727.00	694.60	4.66
DHANLAXMI BANK	15.80	15.15	4.29
YES BANK	184.80	177.40	4.17
I O B	14.70	14.12	4.11
BANK OF INDIA	83.00	79.75	4.08
RELIANCE HOME	40.90	39.30	4.07
CENTRAL BANK	29.75	28.65	3.84
DENA BANK	16.75	16.15	3.72
BF INVESTMENT	233.25	225.10	3.62
UNITED BANK (I)	10.50	10.14	3.55
UCO BANK	19.35	18.70	3.48
REPCO HOME FIN	338.35	327.10	3.44
PNB HOUSING	930.00	899.50	3.39
EQUITAS HOLDINGS	114.05	110.40	3.31
CENTRUM CAPITAL	36.10	35.00	3.14
UNION BANK (I)	75.75	73.45	3.13
DEWAN HSG. FIN.	213.75	207.30	3.11
CAN FIN HOMES	242.25	235.00	3.09
UJJIVAN FIN.SER.	224.30	217.80	2.98
CAPRI GLOBAL	129.35	125.65	2.94
MAGMA FINCORP	105.50	102.55	2.88
IL&FS INV.MANAG.	6.15	5.98	2.84
AU SMALL FINANCE	610.70	593.95	2.82
M & M FIN. SERV.	426.00	415.05	2.64
ORIENTAL BANK	85.95	83.75	2.63
SOUTH IND.BANK	15.95	15.55	2.57