Reforms push extends rally in public sector bank stocks

MUMBAI: The rally in public sector bank stocks, which got under way since the beginning of the month, intensified after the government kicked in a series of reforms, which included a diesel price hike and a financial restructuring package for decrepit state electricity boards.

All public sector banks have outperformed the benchmark index over the past nine trading sessions. While 10 PSU bank stocks rose 20-33%, another 13 gained between 10% and 20%. The Sensex rose just 3.1% during this period. "PSB stocks were beaten down on concerns of asset quality because of their high exposure to the power sector, including distribution companies. But recent announcements, such as the restructuring of state electricity boards and the marginal CRR cut by RBI, brought in positive sentiment for the stocks," said Saday Sinha, analyst at Kotak Securities.

Canara Bank and Oriental Bank of Commerce, which jumped 33.15% and 30.46%, were the top gainers among the PSU banks in the last nine sessions. Among private banks, Axis Bank was the top gainer with a rise of 18%.