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Bank Nifty Soars High After NPA Remarks From Arun Jaitley

20 Mar 2023

Stock prices soared high for the second consecutive session and lenders like State Bank of India witnessed a bull rally after Arun Jaitley, our Finance Minister announced that the government will soon come up with all new measures that will help tackle the non-performing assets. The Finance Minister announced that the Reserve Bank of India along with the Indian government will announce the measures in just a few days. Many lenders also received the boost from expectations about the demand for Yes Bank where $750 million share sale was announced on Thursday. But it can be said that the broader sentiment worked well for the markets, where Nifty which recorded losses in the start of the week, retreated to record a high hit this week. Financial experts state that the Qualified Institutional Placement of Yes Bank where every share was subscribed at Rs. 1500 per share has improved the overall sentiment in the Financial and Banking sector. The statement given by the Finance Minister on the non performing assets India too proved positive for the sector. The Indian stock markets opened high on Friday and the Sensex advanced by about 100 points in its early trade. The Bull Run continued as there was continuous buying from the investors from the banking and FMCG stocks. Nifty too regained its 9100 level with about 30 constituents from the index making good advances. The Baking stocks have advanced and continued with the bull run after the remarks made by Arun Jaitley about the announcement that would be made to tackle all the bad loans. Finance Minister Arun Jaitley addressed the media on Thursday and spoke about stricter mechanisms that will be soon implemented to fix the problem of non-performing assets. The Non Performing assets are the loans where the payment has not been made for a 90 day period. Jaitley promised that the government will come up with a solution in a couple of days, but there were no further details given about the timeline for the said announcement. These are marked in the books of banking and financial institutions as default. The FM also mentioned that the government is working with Reserve Bank of India and that this resolution will mount pressure on borrowers for settling of their dues. Mr. Arun Jaitley also added that there are a number of financial instruments available in the banking sector that can be used for settlement. The Reserve Bank of India has also set up a committee to look into the complete process of cases that are referred to it by other banks. He also blamed the bad loans from the public sector banks that belong to 30-50 companies and mentioned that these will be first fixed to solve the problem. As per the estimate given by the FM, the non-performing assets of the Public Sector Banks were Rs. 5.02 Lakh Crore in March 2016 but rose to Rs. 6.06 Lakh Crore in December 2016. These remarks from the Finance Minister created a positive sentiment in the banking sector and this got in an uptrend in the Bank Nifty and several banking stocks. Financial Experts also suggest that the recovery of Rupee against US Dollar has also supported the existing positive sentiment in the markets. Stocks from the sectors like banking, finance, metals, infrastructure, power and realty were also trading in positive zones. Some of the major gainers were Axis bank, ICICI Bank and SBI. This happened after the news of the telecom giant to get into a deal to buy Tikona Networks surfaced. The brokers also mentioned that the increase in buying from the investors and traders was due to the firming trend in the other Asian bourses. A number of investors are also awaiting the result on the delayed vote on the healthcare reform of US as this is seen as the proxy for the success of pro growth agenda of US President Donald Trump. All these factors have influenced the positive sentiment of the markets, with the highest gainer being the stocks from Bank Nifty.

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