Bank stocks surge, boost equity mkts

With hopes of a rate cut, markets cheered the first day of the August series by ending significantly higher. While the S&P BSE Sensex closed 409 points (1.48 per cent) higher at 28114.56, the CNX Nifty ended with gains of 111.05 points (1.32 per cent) at 8532.85.

Public sector banks led the gainers on the Nifty following the announcement of recapitalisation of these banks. Bank of Baroda was the top gainer, closing up with gains of over 6.4 per cent at Rs 179.40. Other major gainers included State Bank of India (up 4.87 per cent to Rs 269.30), Coal India (up 4.72 per cent to Rs 440.20), HCL Tech (up 4.6 per cent to Rs 1,002). ICICI Bank also ended with smart gains, up 3.37 per cent to 300.80 after the bank came up with a good set of numbers for the first quarter and reported an improvement in asset quality during the quarter.

“There are two immediate factors which are causing the current market surge.  Firstly, there is the hope of a cut in interest rates in the forthcoming RBI policy meet on August 4. Secondly there are signs given by the Q1FY16 results that the asset quality of banks are improving. These in turn are fuelling expectations that the capex cycle in India is in the early stages of a turnaround,” Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services said.