Bank Nifty soars to a record high above 51,000
Private lenders surged in choppy trading on Wednesday helping the Bank Nifty index cross the 51,000-mark for the first time, bolstered by liquidation of bearish derivative bets.
The index comprising nine private and three state-owned lenders hit an all-time high of 51,957 before closing at a record 51,439.9, up 2% over Tuesday. The Sensex ended 0.1% higher, while the Nifty fell 0.2% after shuttling between gains and losses.
«The rally in Bank Nifty was due to short covering as well as fresh buildup of long positions,» said Ruchit Jain, Lead Research Analyst, 5paisa. «The buying interest in banking stocks is due to the risk-reward ratio being favorable compared to other sectors.»
Analysts said traders were forced to square off their bearish positions after the index breached 51,000 — the level at which most of the bearish bets were created.
While the near-term hurdle for Bank Nifty is 52,500 level, Jain's 'positional target' for the index is 54,200.
HDFC Bank and Axis Bank surged 3.1% and 3.1%, respectively, while Kotak Bank, ICICI Bank and IndusInd Bank moved up over 1.5% each. Among the public sector banks, State Bank of India gained 1.11%.
The Nifty Private Bank Index gained 2.1% while the Nifty PSU Bank Index moved 0.09% higher.
Money managers are betting on private banks because of cheaper valuations.
«Banking remains one of the sectors where valuation comfort still exists, this is especially true for private banks,» said Christy Mathai, fund manager, Quantum Mutual Fund. «While the valuations for
