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Banking sector indices Bank Nifty and the S&P BSE Bankex rallied over two per cent on Friday on multiple positive news from the sector, the most prominent being Kotak Bank’s acquisition of ING Vysya Bank.
Heavy institutional participation and short covering took the indices up.
The Bank Nifty closed 2.33 per cent up at 18,056 while the S&P BSE Bankex ended Friday at 20,684, up 2.37 per cent.
Turnover of the Bank Nifty was over ₹3,290 crore. NSE’s CNX PSU Bank index also gained 2.21 per cent to close at 4,063 with the lone loser among its dozen constituents being Union Bank.
Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities, said: “Nifty scaled new highs and was led by banking stocks. RBI lifting FII restriction of share purchase of YES Bank, Kotak Mahindra Bank acquisition of ING Vysya Bank, SBI stock split and strength in the rupee together lifted the Bank Nifty.”
Marketmen said the Kotak-ING deal could trigger consolidation in the banking sector and this was evident from the fact that mid-sized private banks such as Federal Bank and YES Bank were the top two gainers in Bank Nifty.
Fresh wave of dealsJagannadham Thunuguntla, Head of Research, SMC Global Securities, said: “This deal may trigger the possibility of a fresh wave of deals in the banking industry in India. This is especially true in the context that there are several small to mid-size banks in India.
“Further, the wave of consolidation becomes all the more interesting as there are some large size NBFCs waiting to become banks.”
Those on the Street are also focussing on the next RBI meeting on December 2.
Dipen Shah, Head-Private Client Group Research, Kotak Securities, said: “Any dovish signal from the RBI will buoy sentiments within the economy and lead to further improvement at the ground level. The markets will react positively to the same.”
Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services, said: “We also believe event risk from next RBI meet is very low since even if not early, interest rate will be lowered in the medium term.”
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