Nifty Bank Jumps 3.5% On Analysts Optimism; Axis Bank Gains 8%, SBI Up 4%
After brokerages exuded confidence in the banking space, Nifty Bank in trade on August 28, 2020 surged as much 3.5% to day's high of 24438.75 as against previous close of 23600.35. Global brokerage firm UBS in a report said the economy is showing signs of gradual recovery, as evident from the high frequency data, thereby reducing risk pertaining to bad loan creation.
"The recent capital infusion (over US$10bn) in some banks/non-banking financial companies (NBFC) would be additional cushion. We cut our FY21/FY22 estimates for GNPL formation from 7%/5% to 4%/5% of loans. Bank stocks are down 12-62% YTD and have underperformed the broader markets. We think the sector's downside risks are limited," said UBS in a recent report.
Furthermore, IIFL Securities in a report today on F&O expiry said that Bank Nifty index outshined the Nifty index by a staggering 5 per cent, reversing the underperformance of the previous series, with both the indices closing 9 per cent/4 per cent higher.
The optimism on the sector lifted bluechip financial stocks both from the public and private space with Axis Bank gaining as much as 8%, ICICI Bank up 5% and SBI moving higher by up to 4% in intra-day trade.
Meanwhile, Nifty PSU Bank index jumped as much as 5% intra-day, while Nifty Private Bank index also gained up to 3.5%. In comparison, the benchmark indices Nifty soared up to 1% hitting day's high of 11686.
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