CNX PSU bank index jumps 2% in trade; Vijaya Bank locked at upper circuit

CNX PSU bank index was the flavour of the day as it surged close to 2 per cent in intraday trade to 3,366 on the back of strong earnings reported by the public-sector banks (PSBs) especially that of Vijaya Bank.

Overall, the PSBs have posted better than expected quarterly earnings for the period ending December 31 on the back of rising treasury income, arresting the decline in asset quality deterioration and strong current and savings account (CASA) base on the back of huge cash inflow due to demonetisation.

Vijaya Bank posted a stellar set of Q3 numbers which made the stock locked in at upper circuit at Rs 64.10, up 20 per cent. Strong results of banks were supported by profitability and stable set of numbers with respect to asset quality. Taking cue from these good results and generally the feel-good factor surrounding the sector post Union Budget helped other PSB majors to trade higher.

PSB banks have outperformed the broader market by delivering returns in excess of 15 per cent in the previous one month.

The index has surged close to 7 per cent in the previous five sessions. Rally is likely to sustain in future before the index consolidates at higher levels.