Sensex breaching 38,000 level for the first time, Bank Stock Gains

Advances were boosted by banking and metal stocks.

Domestic shares, rose to fresh highs with BSE benchmark index Sensex breaching the 38,000 level for the first time ever. The Sensex ended 136 points higher at 38,024 while the NSE Nifty settled 20 points up at 11,470, both record closing highs.

Advances were boosted by banking and metal stocks. The Nifty Bank an NSE sectoral index of banking stocks extended its record-setting spree to finish at 28,320. Axis Bank, ICICI Bank, Hindalco Industries, SBI and Vedanta closing with gains of between 2.5 per cent and 4 per cent were the top gainers on the 50-scrip Nifty.

ICICI Bank, the country’s third largest lender by assets, hit its highest level since February 1 during the session. In response to a media report on Tuesday that said ICICI Bank masked its bad loans via change in accounting policy, the company said on Wednesday it had made full disclosure in its annual report, investor presentations and analysts calls.

Among other banking stocks, IDFC Bank, PNB and Bank of Baroda ended 3-5 per cent higher.

AK Prabhakar, head of research at IDBI Capital Markets, attributed the surge in markets to a variety of reasons. “One is consistent bull rally backed by banking and metal stocks. Heavyweights such as Axis Bank, ICICI Bank and ITC are supporting the bull run. ITC, which has a good weightage on the index, has launched a new cigarette and is moving higher.”

“Banking sector is doing well because treasury incomes will improve on the amount given by RBI to the government, which will improve the treasury income for the banks,” reported, vice president, head equity advisory, Anand Rathi, as saying.

The Reserve Bank of India on Wednesday announced that it would pay Rs. 50,000 crore as annual dividend to the government. That was in line with the Union Budget provisions, helping the Centre stick to its fiscal roadmap. The central bank, which follows a July-June financial year, had paid a dividend of Rs. 30,659 crore for the previous year.

Metal stocks are taking a boost in anticipation of scarcity of China production, Mr Prabhakar added.

On Wednesday, China said it is slapping additional tariffs of 25 per cent on $16 billion worth of US imports from fuel and steel products to autos and medical equipment on August 23.

Meanwhile, net purchase of shares was at Rs. 568.63 crore by foreign portfolio investors (FPIs) and Rs. 30.25 crore by domestic institutional investors (DIIs) on Wednesday, provisional data from stock exchange NSE showed.

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