Twenty bank stocks rose by 0.98% to 7.62% at 14:15 IST on BSE on optimism falling oil prices will slow inflation and create room for the Reserve Bank of India to cut interest rates.
The BSE Bankex was up 3.12% at 21,264.67 and was the top gainer among the sectoral indices on BSE. It outperformed the Sensex, which was up 1.18% at 28,774.43.
Among private sector banks, IndusInd Bank (up 4.84%), Yes Bank (up 3.52%), Kotak Mahindra Bank (up 3.95%), ING Vysya Bank (up 3.78%), Axis Bank (up 3.12%), ICICI Bank (up 2.48%), Federal Bank (up 2.54%) and HDFC Bank (up 0.98%) edged higher.
Among public sector banks, Bank of Baroda (up 6.97%), Syndicate Bank (up 6.92%), Punjab National Bank (up 7.62%), Canara Bank (up 7.2%), Bank of India (up 5.55%), Allahabad Bank (up 5.82%), Union Bank of India (up 6.23%), State Bank of India (up 4.66%), Andhra Bank (up 5.22%), IDBI Bank (up 5.59%), Dena Bank (up 3.68%), Corporation Bank (up 3.01%) and Vijaya Bank (up 2.09%) edged higher.
The BSE Bankex had outperformed the market over the past one month till 27 November 2014, rising 8.82% compared with 6.3% rise in the Sensex. The index also outperformed the market in past one quarter, surging 14.62% as against Sensex's 7.07% rise.
Minister of State for Finance Jayant Sinha reportedly said in a written statement in parliament today, 28 November 2014, that the government is considering a plan to reduce stakes in state-run banks to 52% that could enable it to raise about Rs 89120 crore. He said the stake sale will enable the government to scale back its budgetary support for the banks.
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A Supreme Court order scrapping most coal extraction permits given to companies would have a likely impact of Rs 96484 crore on state-run lenders, Sinha reportedly said in a written reply in parliament today, 28 November 2014. The government had deduced the impact of the cancellation of the coal block allotments on banks due to likely stoppage of power production, Sinha said.
The Reserve Bank of India yesterday, 27 November 2014, said commercial banks can extend loans to individuals against special long-term bonds issued by them for financing infrastructure projects and affordable housing. This will provide liquidity to retail investors in such bonds, the RBI said in a notification. The RBI said that a bank should lay down a policy in this regard prescribing suitable margins, purpose of the loan and other safeguards. Further, such loans should be subject to a prescribed ceiling per borrower and tenure of loan should be within the maturity period of the bonds, the RBI said. The RBI however barred banks from providing loans against long-term infrastructure bonds issued by other banks. It may be recalled that the RBI had in July this year allowed banks to raise funds by selling special long-term bonds that are exempt from reserve requirements. The funds raised are also exempt from priority-sector norms, making the sale of these bonds attractive for banks that finance infrastructure projects.
Brent extended its decline from a four-year low as OPEC braced for a price war with US shale producers after taking no action to relieve a glut. Brent for January settlement was off $1.12 a barrel at $71.46 a barrel. The contract dropped $5.17 a barrel to settle at $72.58 yesterday, 27 November 2014, the lowest close since August 2010, after OPEC decided to keep the cartel's production levels unchanged at a meeting in Vienna.
The Organization of Petroleum Exporting Countries (OPEC) will maintain its collective output target at 30 million barrels a day, Saudi Arabia's Oil Minister Ali Al-Naimi said after the group met in Vienna yesterday, 27 November 2014. The 12-member group, which pumps 40% of the world's oil, will convene again on 5 June 2015 in the Austrian capital.
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