Private banks soar after FinMin lifts embargo on grant of government business

Private sector lenders logged in big gains in extended trade on February 24 after the government lifted an embargo on the grant of government business to private banks.

As a result, the Nifty Bank index surged 3.80% to 36,452 with HDFC Bank gaining the most 5.36%. Axis Bank, Bandhan Bank, RBL Bank, Federal Bank, ICICI Bank and IDFC First Bank also advanced over 3%.

“Embargo lifted on grant of Govt business to private banks. All banks can now participate. Private banks can now be equal partners in development of the Indian economy, furthering Govt’s social sector initiatives, and enhancing customer convenience,” Finance Ministry announced.

Robust buying in the banking counters lifted the benchmark equity indices higher by over 2%. The 30-share Sensex closed 1,030.28 points up at 50,781.69, while the 50-share Nifty index settled 274.20 points higher at 14,982.

Public sector lender including State Bank of India and Punjab National Bank also gained 3.08% and 2.07%, respectively.

Domestic equity exchanges BSE and NSE decided to extend the trading hours till 5 pm on Wednesday after trading at the latter halted in the morning trade due to a technical glitch.

Commenting on the technical issue at the exchange and domestic equity market, Mazhar Mohammad of ChartviewIndia said, “Mostly it seems some retail brokers squared off F&O positions after 3 pm as BSE was parallel functioning without any impact. Moreover, it seems more like short covering mainly on the back of banks as Finance Ministry lifted an embargo on private banks.”

S Ranganathan, Head of Research, LKP Securities said, “A late surge by bulls across financials post lifting of the embargo on the grant of GOI business to private banks took indices up 2% today when trade time was extended till 5 pm.”