Shares of PSU banks rallied on Wednesday, giving a lift to the benchmark indices. UCO Bank and Union Bank of India led the gains, jumping over 8% each, with Central Bank, Bank of India, and Indian Overseas Bank climbing between 6% and 7%.
The Sensex gained 346.37 points or 0.6% to close at 57,960.09, while the Nifty50 rose 129 points or 0.76% to close at 17,080.70.
The BSE Bankex surged 387.91 points or 0.86% to 45,252.62, with all constituents except ICICI Bank (down 0.49%) ending in the green.
“Markets have been oversold, which has led to a decline in prices. Investors have been booking short-term losses. Globally, things are stabilising with respect to the banking crisis abroad, and from a sentiment perspective market players are slightly positive on the sector,” said Pankaj Pandey, head of research at ICICI Securities.
Pandey said the overall sentiment has been weak for the major part of the year so far, which explains the underperformance on a YTD basis, explaining that banks are facing challenges on an individual level too.
“The divergence identified by the RBI in City Union’s additional gross NPA has affected the lender. In the case of DCB, there have been talks of the lender seeking to expand its balance sheet, which implies higher future costs,” he added.
The Bank Nifty jumped 342.25 points, or 0.86% to 39,910.15, with all stocks ending in the green. “Bank Nifty Option writers made the most in the entire month as it settled the series with marginal losses of 100 points, which is 0.23% at 39,910 compared to the February series close of 40,001 levels. The Bank Nifty remained resilient and has fallen less compared to the Nifty, giving an early sign of short-term bottom process. It has recently formed a low near 38,600, forming a higher support base near 39,250,” said a note by Chandan Taparia, vice-president (equity derivatives & technicals, broking & distribution) at MOFS.