Indian shares ended higher on Thursday as bank stocks climbed on a government move to tackle surging bad loans, while ICICI Bank rallied 9 percent after it said additions to non-performing loans would be lower this year. The broader NSE index closed up 0.51 percent, ending at a record closing high of 9,359.90, while the benchmark BSE index ended 0.77 percent higher at 30,126.21.
India's cabinet has taken significant decisions on the country's banking sector, Finance Minister Arun Jaitley said on Wednesday, declining to give further details, saying it needed a Presidential accord. The government would likely provide the Reserve Bank of India with more power and flexibility to deal with bad loans, the Times of India reported.
"If the government has come out with a meaningful step which will help banks speed up the process of resolution of stressed assets that will be a significant boost for the profitability of corporate banks," said Shibani Kurian, senior vice president and head of equity research at Kotak Mutual Fund. The NSE Bank index rose as much as 1.42 percent to an all-time high.
Bank of Baroda, State Bank of India and Canara Bank gained more than 2.5 percent each. ICICI Bank was up 8.9 percent after the lender said it expected additions to stressed assets to be significantly lower this financial year, although it posted weaker-than-expected earnings. Steel makers rose after the cabinet on Wednesday approved a proposal to make the use of local steel mandatory for government's infrastructure projects, aimed at boosting the sales of local companies. Jindal Steel & Power, JSW Steel and Steel Authority of India Ltd rose more than 2 percent each.
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