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Financial stocks outperformed other sectors, with shares of the biggest banks leading the gains on the NSE and BSE. Nifty banking index was up 1 per cent, while public sector banking index was up 3 per cent.
State Bank of India gained 2.3 per cent, ICICI Bank jumped 5 per cent, and Punjab National Bank rose 3 per cent.
The Reserve Bank of India had on Wednesday transferred Rs 50,000 crore of surplus to the Indian government, more than the Rs 45,000 crore the Finance Ministry had budgeted for FY2018-19.
“The surplus return is positive because it will improve the fiscal mathematics of the government,” Siddharth Sedani, Vice-President and Head of Equity Advisory at Anand Rathi, said.
The money will help the government to step up public spending, improve tight cash conditions and cool bond markets.
“Banks will benefit from this because it will help improve Treasury income,” he added, indicating the impact of better cash conditions on bond yields
The 10-year benchmark bond yield was down 3 bps to 7.75 per cent from the previous close on higher dividend transfer and lower global crude prices.
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