At 12:27 PM; Nifty PSU Bank index, the largest gainer among sectoral indices, was up 3.5% at 3,086, as compared to 0.72% rise in Nifty Bank and 0.48% gain in Nifty Private Bank index. The benchmark Nifty 50 was up 0.38%.
On Thursday, October 19, 2017, the Nifty PSU Bank index closed at 2,943 - its lowest level since January 5, 2017 - and had slipped 21% from its recent closing high of 3,723 on July 31, 2017.
By comparison, the benchmark Nifty 50 was up 1%, while Nifty Bank (down 4%) and Nifty Private Bank index (down 1%) were down less than 5% during the period.
Meanwhile, Moody's Investors Service has said that the ongoing rounds of nonperforming loan (NPL) resolutions initiated by the Indian central bank hold the key to the State Bank of India's (SBI, Baa3 positive, ba1) credit profile.
"The resultant haircut on SBI's assets will likely show a substantial impact," said Alka Anbarasu, a Moody's Vice President and Senior Analyst in a note. Adding, "Our scenario analysis concludes that SBI can absorb haircuts of up to 50%-55%, while maintaining a common equity Tier 1 ratio of above 9.5% at the end of March 2019. Such a common equity Tier 1 ratio would give the bank some buffer above the minimum regulatory requirement of 8.6% by March 2019."