October 29, 2018 / 8:59 AM / 18 days ago

BUZZ-Indian banking shares surge amid upbeat results, govt's liquidity plan

** Indian banking shares surged on Monday, with the Nifty PSU Bank Index rising as much as 8.3 pct in its sharpest daily pct gain since Oct 25, 2017

** Top public-sector lender State Bank of India climbs 8.5 pct to a near two-week high; stock among top pct gainers and boosts to the NSE index, which is up 1.6 pct as of 0814 GMT

** Union Bank of India Ltd jumps 12.4 pct ahead of its qtrly results due later in the day, while Canara Bank Ltd climbs 12.3 pct

** Most PSU lenders have reported profit and their asset quality has shown improvement, said Yuvraj Choudhary, an analyst at Anand Rathi Securities

** State-owned Vijaya Bank on Monday said gross bad loans as a pct of total loans fell to 5.86 pct at end-Sept vs 6.19 pct last qtr, though it reported a fall in qtrly profit; shares rose 10 pct

** On Friday, India’s central bank said it will buy 400 bln rupees ($5.45 bln) of government bonds via open-market operations (OMO) in November to inject liquidity into the market, amid worries about a credit crunch after defaults at a major infrastructure financing company

** “The OMO announcement is a positive, but I think the major impact (in the banking sector) is from positive results,” Choudhary added

** The Nifty Private Bank index climbed 2.5 pct, boosted by a 11.7 pct jump in ICICI Bank Ltd

** ICICI on Friday reported improved asset quality in Q2

** After ICICI’s better-than-expected performance on the asset quality front, people are expecting the same from other corporate lenders now, said Alpesh Mehta, analyst at Mumbai brokerage Motilal Oswal Securities

$1 = 73.3775 Indian rupees Reporting by Chris Thomas and Krishna Kurup; Editing by Sunil Nair

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