Shares of public sector undertaking (PSU) banks pared morning gains to fall over 1% on profit booking, snapping Wednesday's rally. The PSU Banks rallied after Finance Minister Arun Jaitley spelt out an ambitious Rs 2.11-lakh-crore recapitalisation plan for the government banks. The announcement was made post market hours on Tuesday.
Nifty PSU Bank fell 1.2% to 3,960 after rallying 8% in the earli-morning deals. It rallied 30% rise on the National Stock Exchange (NSE) on Wednesday . The index was trading its highest level since January 29, 2015, when its hit 4,410 in intra-day trade. It touched an all-time high of 4,639 on April 27, 2011.
State Bank of India (SBI) were off day's high, falling over 1% after yesterday’s nearly 28% rallied on the BSE. Earlier, the stock had seen the same level on November 8, 2010.
Canara Bank, Oriental Bank of Commerce also fell between 2.5% and 4.5%% after hitting their respective 52-week highs in intra-day trade today.
The government’s announcement of the Rs 2.11 lakh crore recapitalization plan for public sector banks (PSBs) comes as a concrete and timely move that provides much needed relief for the PSBs which are ailing under asset quality pressures and sluggish credit growth and is a credit positive step, according to rating agency CARE Ratings.
The size of the current recap plan appears adequate in the light of estimated capital requirements of PSBs and CARE Ratings feels that this can serve a dual purpose of cushioning the capital adequacy post provisioning and also providing growth capital to the banks. Overall, this move augurs well for the Indian banking sector, it added.