Mumbai: Bank stocks Thursday surged by up to 6 percent, after Moody's raised India's credit rating outlook to 'positive'.
While shares of Punjab National Bank surged 6.03 percent, Indusind Bank gained 4.63 percent on the BSE.
Among others, Kotak Mahindra Bank rose by 4.20 percent, Bank of India by 3.15 percent, AXIS Bank by 2.88 percent and Yes Bank by 2.67 percent.
Similarly, SBI was up 2.50 percent, HDFC Bank gained 1.68 percent and ICICI Bank rose by 1.65 percent.
Led by gains in these stocks, the BSE bankex index settled the day 2.58 percent higher at 21,687 and was the biggest gainer among the 12 sectoral indices.
"Among day's major market moving events, Moody's upgraded the outlook for Indian economy from stable to positive.
"Markets rallied on this news as the rating upgrade would help foreign institutional investors be more comfortable investing long term in Indian markets and this move is expected to attract more capital," said Rakesh Goyal, Senior Vice President, Bonanza Portfolio Ltd.
Sharing similar views Jayant Manglik, President-retail distribution, Religare Securities Ltd said after the recent under-performance, banking sector finally witnessed strong rebound today and ended on strong note.
"We believe this move will extend further in the coming sessions and it would further fuel the prevailing recovery in the benchmark index," Manglik said.
In a big vote of confidence in the Narendra Modi-led government, Moody's today raised India's credit rating outlook to 'positive' and said an upgrade in its sovereign rating is also possible in the next 12-18 months.
Upgrading the outlook from 'stable' to 'positive', the global rating agency said that India has grown faster than many other peers over the last decade and the actions of the policymakers should further boost the country's economic and financial strength in coming years.
In the broader market, the benchmark Sensex ended at 28,885.21, up 177.46 points.
