New Delhi: Banking and financial stocks were in high demand on Friday, advancing up to 21 per cent after the Reserve Bank announced a host of liquidity-boosting measures to support the economy amid the coronavirus crisis.
Axis Bank zoomed 13.45 per cent, ICICI Bank rose by 9.89 per cent, IndusInd Bank 9.13 per cent, Federal Bank 9 per cent, City Union Bank 5.39 per cent and Kotak Mahindra Bank 4.96 per cent on the BSE.
Axis Bank was the top gainer in the Sensex pack.
Also, HDFC Bank jumped 3.33 per cent, RBL Bank 3.22 per cent and SBI 2.49 per cent.
Led by the rally in these scrips, the BSE Bank index rose by 6.83 per cent.
Likewise, from the finance pack, Equitas Holdings zoomed 21.15 per cent, Shriram Transport Finance Company 20 per cent, J&K Bank 19.95 per cent, Indiabulls Housing Finance 17.61 per cent, Dhanlaxmi Bank 17.51 per cent, DCB Bank 16.54 per cent, Ujjivan Financial Services 14.54 per cent and Cholamandalam Investment and Finance Company 11.33 per cent.
The BSE Finance index gained 5.44 per cent.
“Given the unprecedented times we are in, it is heartening that RBI is addressing all these challenges at a war footing. We believe the key measures announced by RBI will help inject the much needed liquidity in the system, facilitate and incentivise credit flow and provide flexibility on regulatory forbearance. Markets are in buying zone,” according to Motilal Oswal, MD and CEO of Motilal Oswal Financial Services.
In the broader market, the 30-share BSE Sensex ended 986.11 points or 3.22 per cent higher at 31,588.72.
“The RBI’s announcement has correctly focused on the financial sector, specifically the NBFCs. However, given the current macro conditions, we need to watch how the banks utilize the various windows and options given by the RBI to assess whether credit growth increases and the extent of support that the NBFC sector gets,” said Suvodeep Rakshit, Vice President and Senior Economist, Kotak Institutional Equities.
The RBI on Friday further eased bad-loan rules, froze dividend payment by lenders and pushed banks to lend more by cutting the reverse repo rate by 25 basis points, as it unveiled the second set of measures to support the economy hit hard by the coronavirus-led slowdown.
In his second televised address since the nationwide lockdown began from March 25, the Reserve Bank of India (RBI) Governor Shaktikanta Das pledged to boost liquidity and expand bank credit.
Other interest rate-sensitive indices like auto and realty also closed with significant gains.
“NBFCs are clear beneficiaries of these measures. For investors in banks, the provision of higher liquidity and relaxation in provisioning norms are welcome, but the bar on dividend distribution and new provisioning norms are negatives for the time being.
“While the RBI is doing its part in providing reliefs in the current times, the street could keep expecting more and there could also be some concern about the time it would take for these measures to have an impact at the ground level,” said Deepak Jasani – Head Retail Research, HDFC Securities.
