PSU Banks, LIC Shares Rise After PM 'Guru Mantra'

Shares of public sector banks ended higher on Friday, a day after Prime Minister Narendra Modi said that state-owned companies have performed well under his government.

“There is a guru mantra for those interested in the share market--bet on stocks that the opposition raises concerns about,” Modi said in Lok Sabha on Thursday in response to the no-confidence motion against his government. He was taking a jibe over questions raised over the past year about loan write-offs by public sector lenders and Life Insurance Corp.’s investments.

Shares of public sector banks jumped on Friday led by Indian Overseas Bank Ltd., surging 13.36%, followed by Central Bank of India Ltd. and UCO Bank Ltd., climbing 6.63% and 4.87%, respectively.

The NSE Nifty PSU bank index ended 1.25% higher at Rs 4,555.75 apiece compared with a 0.6% decline in the benchmark Nifty 50.

Citing the opposition's remarks on the banking sector sinking, PM Modi said, "They intensified the task of spreading various kinds of pessimism and rumors regarding the health of our banks. And while they harboured ill will for the banks... the net profit of our public sector banks has more than doubled."

Life Insurance Corporation of India Ltd. shares also rose as the Prime Minister defended the record of India's largest life insurer. Addressing the "rumours" regarding LIC, he said, "I give the third example. LIC is ruined, the money of the poor is drowning, where will the poor go, the poor man had put money in LIC with great effort, and what not. But today LIC is continuously getting stronger."

LIC shares gained 2.83% to close at Rs 659.85 per share.

Shares of Hindustan Aeronautics Ltd. (HAL), however, ended 0.6% lower to close at Rs 3,791. Modi had also the opposition's comments on HAL.

"They spoke so many bad things about HAL. HAL is destroyed, HAL is finished, India's defense industry is finished. Today HAL is touching new heights of success," he said. "HAL has registered its highest ever revenue. HAL has emerged as the pride of the country today, despite their serious allegations and efforts to instigate the workers and employees there."