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Bank stock gains as RBI transfers Rs 50,000-Cr surplus to govt

On Thursday, the BSE Sensex hit fresh all-time high and crossed the mark above 38K for the first time, led by on gains in heavyweights, such as ICICI Bank, Infosys and Axis Bank.

During First afternoon hours of trade, Nifty is trading 24 points higher at 11,474-level while Bank nifty trades higher at 28,307-level close to the high point of the day.

Financial sector stocks outshined other sectors, with shares of the biggest banks leading the gains on bourses (NSE and BSE). Bank Nifty index was up 1%, while PSU banking index was up 3%.

The RBI had on Wednesday transferred Rs 50,000 crore of surplus to the Indian govt, more than the Rs 45,000 crore the Finance Ministry had budgeted for financial year 2018-19.

Meantime, according to the investment bank Morgan Stanley, the bank stock can be expected to be twofold in the next two years. It observes a favorable risk reward since it trades at 1.2-times estimated price-to-book value for the FY 2019-20.

Further, after a good start of earning numbers, the market seems to be taking note of the IMF numbers which remained optimistic about India’s economic growth and forecast GDP growth at 7.3% for this fiscal year and 7.5% for FY2019-20.