Banking Stocks Surge; ICICI, SBI, HDFC Bank Lead Gains

Sharemasterindia.com: Banking shares rallied on Monday with the sectoral index Bank Nifty rising nearly 1.8 per cent as compared to a 0.90 per cent gain in Nifty. Analysts attributed the outperformance to a catch-up rally.

Banking stocks have underperformed the broader markets so far this month as concerns over a weak monsoon put in doubt future rate cuts by the Reserve Bank of India.

Bank Nifty is down nearly 4.5 per cent so far this month as compared to a 2.2 per cent loss in Nifty.

Prashasta Seth, CEO of IIFL AMC, has a positive stance on banking stocks, attributing today's rally to a catch-up rally. The recent correction in banking stocks makes valuation look attractive while monsoon concerns have eased, he said.

Investors with a long-term perspective can also look at public sector banks, he added. The government might take a fresh look at recapitalization of public sector banks in view of weak credit growth, he said.

Among the banking stocks, Bank of Baroda rose 3.5 per cent to be the biggest Nifty gainer. Yes Bank, Kotak Mahindra Bank, Axis Bank, and IndusInd Bank were up between 2.5 per cent and 3 per cent. Among large caps, HDFC Bank rose over 2 per cent while ICICI Bank and SBI rose 1.7 per cent.