Indian bank stocks rallied the most since September on expectations Narendra Modi’s coalition will win a parliamentary majority in elections, paving the way for policies that may boost economic growth and cut bad loans.
India’s government should cut its stakes in state-controlled banks to below 50 percent, a central bank-appointed committee said in a set of recommendations to improve competitiveness and governance. Ownership in private- sector lenders should be allowed to rise, the panel also said.
Yes Bank Ltd., the best-performing Indian bank stock last year, has lost almost half its market value in less than a month on investors’ concern that a record surge in interest rates will erode profits and boost defaults.
Prashant Jain, chief investment officer at India’s biggest money manager, said he sees value in some of the nation’s biggest lenders amid prospects of a reduction in bad loans that have made them Asia’s worst- performing banking stocks in the past year.