While the headline indices have shed their highest gains made today, what is holding the momentum is the banking stocks as well as stocks from the auto space while IT stocks which were the star performers on October 5, 2020 have lost their gains today.
And among the index gainers, Bank Nifty traded the strongest with gains of 1.3 percent at the time of writing this report.
In trade today, the index rallied up to day's high of 22786.9 points as against previous close of 22370.95, which is a gain of 1.8 percent. Among the stocks contributing the most to the gains have been HDFC Bank, ICICI Bank, Bandhan Bank, IndusInd Bank, Kotak Mahindra Bank among others.
And here are given two probable reasons for the continuing surge in the index even as headline indices have retreated from day's high i.e. Nifty is holding now below 11600 points.
1. Optimistic HDFC and HDFC Bank Q2 Business update: This is the heavyweight suggest return of retail loan business which saw improvement month on month during the July-September period. The strong recovery with individual loan disbursements reaching 95% of pre-Covid levels.
Also for the HDFC Bank there has been a traction as the private lender reports 20% y-o-y surge in Q2FY21 quarter.
2. No change in Monetary policy: Owing to the technicalities of completing the background screening and other processes of then assumed to be appointed MPC members there was a postponement of MPC meet which was scheduled for October 1, 2020 and now there is a news that the meet shall take place between October 7 and October 9 and with diverse views if at all there is any change in key policy monetary decision it shall have a bearing on the rate sensitive stocks including banking sector.
3. Interest on interest waiver relief still pending: While the SC is yet to decide on the case for extending relief of waiver on interest relief on interest accrued on loan EMIs during moratorium, the government has said that it can bear the compound interest burden for loans up to Rs. 2 crore. This is said to cost the exchequer hugely but comes as a relief for banking companies who were amid the Covid 19 pandemic were already provisioning higher bad debt.