MUMBAI: Banks led Indian stocks to record highs Wednesday after the government approved a multi-billion-dollar recapitalisation plan for state-owned lenders to help spur investment in the Asian giant’s slowing economy.
The Bombay Stock Exchange’s Sensex (BSE) index crossed 33,000 points for the first time while the Nifty on the National Stock Exchange hit an all-time high of 10,340.55 in morning trade.
The Sensex at one point rose 1.56 percent to 33,117.33 — breaking its previous intra-day high of 32,699.86, which it set on October 17 — shortly after the opening bell. It later pared some of the gains.
The Nifty increased 1.30 percent to better its previous high of 10,251.85, which was also recorded on October 17.
Banks enjoyed the biggest gains a day after Finance Minister Arun Jaitley announced that the government would inject $32 billion dollars over the next two years to help the country’s debt-laden lenders clean up their books.
The State Bank of India soared more than 23 percent while its private competitors ICICI and Axis Bank gained more than 11 percent and eight percent respectively.
Indian banks have some of the highest levels of debt in emerging markets.
According to Credit Suisse, some 13 trillion rupees ($200 billion) in loans have soured, the bulk of them at public-sector banks.
The mountain of debt means banks have been stretched too thin to lend for fresh investments, holding back economic growth.
The government’s push comes after the Indian economic growth, hit by tax overhauls and a black market clampdown, slumped to a three-year low of 5.7 percent in the fiscal first quarter.
Source: Brecorder.com
