India’s private sector banks led gains in market capitalization in the three months to June 30 amid improvement in their financial metrics and positive sentiment in the Indian stock market, research by S&P shows.
Axis Bank Ltd.’s market capitalization rose 20.9% to 3.911 trillion rupees in the period, S&P Global Market Intelligence data shows.
India’s biggest private lender, HDFC Bank Ltd., posted a 16.5% increase in its market capitalization to 12.811 trillion rupees. Barring IndusInd Bank Ltd., the market capitalization of all private sector banks among the 20 largest banks in the country improved from the previous quarter.
Positive investor sentiment contributed to the increase in market capitalization. The benchmark S&P BSE Sensex index rose 7.3% in the second quarter, while the Nifty 50, another commonly tracked benchmark, was up 7.5%. The Nifty Private Bank Index rose 10.7% in the June quarter.
Banks’ overall advances rose during the financial year and higher profits boosted return on average equity (ROAE), data collated by S&P shows.
“Financial performance at Indian banks has improved consistently over the past few years due to robust credit growth and efforts to curb nonperforming loans,” S&P said.
Credit growth at private sector banks stood at 19.3%, while public sector banks recorded a 14.7% increase year-on-year at the end of March, RBI data showed.
India’s GDP is likely to grow 7.2% in the fiscal year that started April 1, according to the Reserve Bank of India, allowing the south Asian nation to remain the fastest-growing major economy in the world.
As per S&P, 16 of the 20 largest banks in India posted an increase in market capitalization in the three months ended June, with five of them posting double-digit increases. Three of the four banks that saw their market capitalization decrease were public sector banks: Bank of India Ltd., Union Bank of India, and Punjab National Bank.
