Robust Q2 drives up bank stocks

Bank stocks spurted by over 4 per cent on an average in an otherwise choppy market on Thursday on strong buying as most banks have posted a better-than-anticipated second quarter numbers.

With the US Federal Reserve keeping interest rates at 5.25 per cent yesterday, there was strong buying in bank stocks on expectations that the Reserve Bank of India (RBI) may not hike rates in its credit policy on October 31, analysts said.

While the bellwether BSE-30 Sensex rose by a marginal 0.60 per cent, BSE's Bankex shot up by 3.48 per cent or 212.61 points to 6,314.59, making it the biggest gainer among all indices on Thursday. NSE's Bank Nifty spurted by 4.06 per cent to 5,460.10.

Leading private sector bank ICICI Bank had the sharpest rise among the Sensex stocks at 4.56 per cent to Rs 753.40, on the back of a 30 per cent rise in its net profits in July-September quarter.

"The results by both public sector and private banks have been better-than-estimates. This has also led to accumulation in counters such as State Bank of India (SBI), which will announce its Q2 results on October 28," said an analyst with a domestic brokerage house.

SBI's shares rose by 4.04 per cent to Rs 1,065.80 on BSE, after investors felt that the Q2 numbers by country's top public sector bank would beat earlier-estimates.

"There is a re-rating on the banking sector stocks by the foreign brokerages," said a fund manager with a mutual fund house.

The other major gainers were Oriental Bank of Commerce (up 7.12 per cent to Rs 257.20), which will announce its Q2 numbers on October 30 and Bank of India (up 5.51 per cent. BoI will announce its second quarter results tomorrow (October 27).