MUMBAI
India’s stocks benchmark rose as the country’s largest lender by assets, State Bank of India, advanced for a second day on optimism the bad-loan problem for state-run lenders has peaked.
The S&P BSE Sensex climbed 0.4 per cent to a record 31,369.34 in Mumbai. State Bank of India was the top performer, by gaining 2.2 per cent, the most in more than a month. Nine out of the 13 sub-indexes compiled by BSE Ltd gained, paced by a gauge of real estate companies.
“Our analysis suggests that large public-sector banks have taken significant recognition and we are closer to the peak of the non-performing assets cycle,” Adarsh Parasrampuria and Amit Nanavati, analysts with Nomura jointly wrote in an investor note. With risk-reward “turning favourable” for Punjab National Bank, Nomura upgraded it to a buy from neutral.
Investors also got bullish signals from two different data releases. The government said Thursday the amount of monsoon rainfall has been 5 per cent more than normal since the season started last month. And exchange data showed foreign funds’ open interest, or number of contracts outstanding in value terms, rose 1.2 per cent to about Rs1.5 trillion ($23 billion) Wednesday.
“The next triggers will be the first-quarter earnings, and the progress of monsoon,” said Gaurang Shah, head investment strategist at Geojit Financial Services Ltd in Mumbai. “Banking stocks are benefiting from decisive moves from the government and the central bank to resolve the problem of bad loans.