In the recent bull run, BSE Sensex touched an all-time high. Among the sectoral indices, BSE Bankex pushed the Sensex ahead of 8000. Bank stocks led the overall rise on the Indian bourses. Strong economic fundamentals are the main cause for this bull rally of Indian banks. In this article we discuss the performance of Indian banks in the capital market.
The months of September and October in 2005
witnessed a faster bull run in the Indian stock
markets. The Bombay Stock Exchange (BSE)
Sensitive Index (Sensex) has been rewriting history on a
consistent basis. The 30-share sensex, the stock market
barometer, kept up the bullish trend to hit an intra-trade
high of 8,808.83 on October 4, 2005, mainly driven by a
surfeit of liquidity and ended the day at a new closing
peak of 8,799.96. This historic attained an all time high
the first time in the 130-year history of the Indian stock
market. The S&P CNX Nifty also touched a new record
closing high at 2663.35 on the National Stock Exchange
(NSE) during the same period. The Sensex indicates the
health of BSE. It is also considered to be the indicator of
the state of the Indian economy. A strong 8.1% GDP
growth with robust economic fundamentals motivated,
Foreign Institutional Investors (FIIs), together with
domestic funds, to make hectic across-the-board
purchases. The high expectation from Q2 result of the
corporate sector sustained the bullish sentiments.
Amid this bull rally, the banking sector too recorded a
heavy sale during that period. If we consider the last one
year, the BSE bank index has outperformed the Sensex.
The BSE bank index rose by 61% in the last year from
2456.32 in June 2004 to 3954.44 in June 2005; while the
Sensex rose from 4738.62 to 7076.52, which was around
49% rise only. Among the 11 BSE sectoral indices, the
highest increase in Market Capitalization (M-Cap) was
shown by BSE-Bank, which increased by 18.97%. The
banking sector recorded a robust growth. As the busy
season is still ahead, it is expected that the banking
business will take-off, starting from the month of
October.
Among banks, the private sector outperformed the
public sector. Private banks like ICICI, UTI, and HDFC
were the major gainers in the bullish market during that
period. Among public sector banks, SBI has shown some
consistency in the stock market because it is a large
public sector banks within the country and with
expectation of going international soon. |
