Shares of Punjab National Bank and Bank of Baroda led the gains in banking stocks on Tuesday. Punjab National Bank rose over 4 per cent, adding to its over 3 per cent gain on Monday. Bank of Baroda rose nearly 2.5 per cent, after rising over 3 per cent on Monday.
Banking stocks continued to outperform on Tuesday as concerns over monsoon eased with better-than-expected rains so far. Banking stocks had underperformed the broader markets this month as concerns over a weak monsoon put in doubt future rate cuts by the Reserve Bank of India.
Dipan Mehta, a member of BSE, says with better-than-expected monsoon so far, hopes are rising about RBI rate cut. Bank Nifty rose 0.90 per cent today after seeing a 2.5 per cent gain on Monday.
Market analyst Sandip Sabharwal told NDTV that shares of some PSU banks, where their chiefs are set to get appointed soon, could see a rally in the short term. "Two of the largest state runs lenders such as Bank of Baroda and Punjab National Bank will see their heads getting appointed over a month's time frame and this could spark a rally," he said.
Also boosting the sentiment in PSU banking stocks, Finance Minister Arun Jaitley on Monday said government will infuse capital in public sector banks in the next three to six months. Mr Jaitley has earmarked Rs 7,940 crore in the Budget for recapitalisation of PSU banks during the current fiscal.
At 10:45 a.m., shares of PNB were up 4.2 per cent at Rs 143.80 while Bank of Baroda gained 3.1 per cetn to Rs 150. Among other PSU banks, SBI shares were up 1.5 per cent.
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