Narendra Modi govt's public sector banks' recapitalisation push puts Sensex, Nifty in party mood, PSB stocks lead gains

The Narendra Modi government's Rs 2.11 lakh-crore public sector banks recapitalisation plan led to a historic market rally today with the Sensex and Nifty touching their all-time highs led by Punjab National Bank,  Bank of Baroda, Bank of India, Union Bank and Canara Bank stocks which gained the most on BSE.

The BSE Sensex, which breached 33,000 level in early morning trade, closed 435 points or 1.33 percent higher at 33,042 level.

The Sensex for most of the day remained below the key 33,000 level but saw hectic buying in the nearly last three hours of trade to hover above the crucial level.

Also read: Govt announces massive capital infusion plan for banks, but challenges remain

Banking sector stocks rose up to 46 percent led by Punjab National Bank and Canara Bank among others.

Punjab National Bank (46.20 percent), Bank of Baroda (31.47 percent), Bank of India (33.96  percent), Union Bank (34 percent ) and Canara Bank (38.05 percent) gained the most on BSE.

Nifty too hit an all-time high of 10,340 on the PSB recapitalisation boost in early morning trade.

The NSE index was up 0.86 percent or 87.65 points higher at 10,295 level.

The government on Tuesday unveiled two-year road map for strengthening NPA-hit public sector banks, which includes re-capitalisation bonds, budgetary support, and equity dilution.

Bank Nifty hit a new high of 25,035 level, rising 3.36 percent or 813 points. The BSE Bankex too hit a new high of 28,341 level, rising 4.71 percent or 1274.44 points.

The capital infusion of PSBs entails mobilisation of capital, with maximum allocation in the current year, to the tune of about Rs 2,11,000 crore over the next two years, through budgetary provisions of Rs 18,139 crore, and recapitalisation bonds to the tune of Rs 1.35 lakh crore.

Private sector lender Kotak Mahindra fell over 5 percent or 58 points to 1009 level even as the private sector lender reported a 19.81 per cent rise in consolidated profit after tax (PAT) at Rs 1,440.68 crore for the second quarter ended September 30. The bank had posted PAT of Rs 1,202.4 crore in July-September of the previous fiscal.

HCL Technologies, which reported a 9.5 per cent rise in second-quarter net profit on account of higher revenue from its software services sector, was down 0.71 percent.

Road sector stocks too closed higher after the government announced Rs 7 lakh crore plan for building 83,677 km of highways across the country over the next five years which will give a major push to the country's infrastructure and create more jobs.

IRB Infrastructure (5.60 percent), Sadbhav Engineering (9.23 percent), ITD Cementation (1.84 percent), Ahluwalia Contracts (3.25 percent), and KNR Constructions (8.12 percent) were the top gainers in the road sector space.

The Hindustan Unilever stock closed 0.18 percent higher minutes ahead of announcement of its Q2 earnings.

Market breadth was negative with 1529 stocks falling against 1163 stocks rising on the BSE.