PNB, SBI, Canara Bank, Bank of India: Why banking stocks rallied in fag end of trade today 

Banking stocks were the top gainers on Monday after a report said the government was planning to allow direct foreign investment in state-run banks of up to 49%, more than double current limits. BSE bankex spurted 169 points in the final hour of trade amid the news report. Nifty bank too spurted 133 points in the final hour of trade.

According to a Reuters report, the finance ministry has been discussing the matter with the Reserve Bank of India (RBI) but the the proposal is yet to be finalised.

The BSE bankex zoomed over 422 points to end at 65,512 and Bank Nifty gained 414 points to 58,114.

Federal Bank (2.88%), Bank of Baroda (2.87%), SBI (2%), IndusInd Bank (2.02%), Axis Bank (0.97%) HDFC Bank (0.82%) and YES Bank (0.40%) shares were among the top gainers on the BSE banking index.

PNB stock gained 2.48%, Canara Bank shares rose 2.78%, Bank of India (4.48%) and Indian Bank (1.20%) were among the other gainers among state run banks.

Currently, government allows foreign ownership of up to 74% for private lenders.  The government plans to hike foreign investment cap in state-run banks to 49% from the current 20%, according to the Reuters report.