The Nifty Bank index jumped nearly 700 points to hover around 55,460 in afternoon trade on May 15, snapping a two-day losing streak, in-line with an overall uptrend in the market.
Benchmark Sensex has rallied over 1,300 points at over 82,600, and Nifty is above 25,000 in continued investor interest.
ICICI Bank was the top gainer on the index, jumping over 2 percent, followed by Axis Bank which is higher by 1.7 percent. Shares of HDFC Bank were up around 1.5 percent. Kotak Mahindra Bank, State Bank of India (SBI), Bank of Baroda, Federal Bank and Punjab National Bank (PNB) shares too were higher in the trading session.
Few stocks bucked the trend, with IndusInd Bank, AU Small Finance Bank, Canara Bank and IDFC First Bank shares trading with marginal losses.
Axis Securities remained bullish on the bank index and said easing global slowdown fears could imply greater credit offtake. "Domestic inflation data raised optimism for potential rate cuts by the Reserve Bank of India, while positive US inflation figures and easing US-China trade tensions eased global recession concerns."
The increased possibility of a rate cut by the central bank may also be seen as a positive for the banking stocks.
India's annual retail inflation fell to 3.16 percent in April, down from 3.34 percent in March, data released on May 13 showed. This is the third month in a row that inflation remained below the Reserve Bank of India's target of 4 percent.
Additionally, stocks moved after reports said that US President Trump has claimed India offered a 'no tariffs' trade deal to America. Speaking at a meeting with business leaders in Doha, Trump said, "It is very hard to sell in India, and they are offering us a deal where basically they are willing to literally charge us no tariffs."
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