Shares in Public Sector Banking units surged after the approval by the government of fresh infusion of capital into these banks. The government announced recapitalization measures to the tune of Rs 2.11 lakh crores in government owned banks.
State Bank of India, the country’s largest lender rallied a huge 19 per cent in trade. Among the other government owned banks that gained were the larger lenders including the likes of Bank of Baroda and Punjab National Bank. In fact, Bank of Baroda and PNB were up almost 25 per cent in trade. One stock that bucked the trend was HDFC Bank, whose shares fell sharply, by almost 2.5 per cent. Shares in Infosys were trading higher despite weak guidance. HCL Tech, which reported quarterly numbers today dropped marginally in trade. The quarterly numbers were largely in line with analysts estimates. Analysts expect some profit booking in government banks, later in the day.
Finance Minister Arun Jaitley said the Indian economy is on a strong wicket, with growth having bottomed out and a rebound expected in the coming quarters based on the back of “strong macroeconomic fundamentals”.
To boost public expenditure and push economic growth, the government announced enhanced spending for construction of roads and highways, a capitalisation plan for banks worth Rs 2.11 lakh crore over two years and prioritised financing support for MSMEs in 50 clusters.
Jaitley said the Indian economy was on a strong wicket, with growth having bottomed out and a rebound expected in the coming quarters based on the back of “strong macroeconomic fundamentals”.
He said there was need to increase public spending and, therefore, an effort has been made to increase public spending to an “unprecedented level’’.
“In the last few weeks, a lot of discussions took place within the government in relation to the economy. Finance Ministry (officials) had detailed meetings with Prime Minister… for last three years, India has been the fastest growing major economy in the world and our intention is that the high-growth economy that India has become, we continue to maintain that position,” Jaitley said.