PSU banking stocks in limelight

PSU banking stocks are today doing well, with the banking index showing 10 stocks on the advance while 2 are on the decline. Bank of Baroda is a big gainer, currently up over 6% at Rs.612.50, Bank of India up over 3%, Bank of Mahrashtra up 2%, Canara Bank over 4%.

PSU banking stocks have been battered down persistently for some time now and even now, the perception for the banks have not changed. Today, the stocks are reacting to the statements issued by the Finance Minister, Mr.Chidambaram, wherein he said that NPAs of PSU banks are expected to be slightly higher this financial year from a year earlier. But instead of looking at this negatively, markets have chosen to interpret this message as a signal that with election dates also being announced, PSU banks are finally freed from the threat of more loan waivers, which would have been further detrimental for the banks health. Thus the absence of any loan waiver is being cheered by punters today though the fact still remains that bad loans will continue to show on their balance sheets in the months to come.