The Nifty Bank gained was up around 0.28 percent, led by gains of 1-2 percent in ICICI Bank, Axis Bank, Punjab National Bank, Bank of Baroda and IDFC Bank, among others.
Driven by the news of government borrowing requirement being cut, banking stocks surged during the morning trade, with indices gaining around half a percent.
Investors cheered the possibility of a marginal reduction in concerns of fiscal deficit. Bond yields too witnessed easing.
Meanwhile, the Nifty PSU banks witnessed a bigger surge based on this development, up around 1 percent. Indian Bank, Bank of Baroda, Bank of India, Union Bank of India, Allahabad Bank, Punjab National Bank, and Canara Bank gained around 1 percent.
For the uninitiated, the secretary to the Department of Economic Affairs in the Finance Ministry, Subhash Garg, in a tweet, outlined the need for lesser government borrowing.
“The move is a big positive surprise. We were mindful of the indirect tax collection falling short of expectations. In that context, this is a big surprise. It also means that a shortfall in indirect taxes is being made up (for). All in all, this is a positive surprise, which is getting reflected in the market,” Manishi Raychaudhuri, Asian Equity Strategist, Equity Cash Asia Pacific, BNP Paribas told CNBC-TV18 in an interview.
Government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern. Requirement of additional borrowing being reduced from Rs 50000 crore as notified earlier to Rs 20000 crore.
— Subhash Chandra Garg (@SecretaryDEA) January 17, 2018