Indian shares climbed on Thursday in tandem with broader Asian markets, lifted by banking and consumer stocks, though a sharp spike in coronavirus cases capped gains.
Sentiment was subdued as the total number of known coronavirus cases in India rose sharply to 29 on Wednesday, leaving investors cautious about its impact on Asia's third-largest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan added 0.7% after the US Federal Reserve rate cut offered investors some salve for the global economic outlook.
European shares also fell on Thursday, after a surge in virus cases in the United States led to a drop in equity futures on Wall Street, implying a lower open for US markets.
In the domestic market, the Nifty banking index closed up 0.56% with Yes Bank surging over 25% on reports that the country's biggest lender State Bank of India would inject funds into the troubled private-sector bank.
Consumer heavyweight Hindustan Unilever ended 1.94% higher and was the top boost to the Nifty FMCG index, which closed up 1.05%.
Zee Entertainment, the biggest laggard of the session, closed 5.4% lower.
Yes Bank soars
Shares of Yes Bank Ltd surged nearly 30% on Thursday after Bloomberg reported that a group led by top lender State Bank of India will inject capital into the troubled private-sector bank.
SBI has been authorized to pick other members of the consortium in the plan approved by the Indian government, Bloomberg reported here citing people with knowledge of the matter.
An announcement is expected soon, according to the report.
Shares of SBI fell as much as 5.4% on the report, before reversing course to trade 1% higher by 0847 GMT in a firm Mumbai stock market.
Yes Bank in a filing here with the stock exchanges said it was not aware of any such decision, while SBI said here it would abide by timelines for disclosures. India's Finance Ministry did not immediately respond to a Reuters request for comment.
“The cost of not bailing out Yes Bank for the economy and banking system is far higher than bailing out and hence under the current circumstances this looks to be the only option as investor interest in the stock is very low,” Macquarie Research said in a note.
Yes Bank has struggled to raise capital it desperately needs to stay above regulatory requirements as it battles high levels of bad loans due to its exposure to troubled sectors.
India’s fifth-largest private sector lender has been trying to raise $2 billion in fresh capital since late last year, and in February delayed its December-quarter results due to the plans.
“The more the delay in capital raising, more is the systemic risk engendered by Yes Bank’s failure,” Macquarie said.
In January, the bank said it had rejected a $1.2 billion investment offer from Canadian investor Erwin Singh Braich and Hong Kong-based SPGP Holdings - an offer about which many analysts had expressed doubt.
Shares of larger private-sector rival Kotak Mahindra Bank Ltd jumped 4.3% after the report, pushing the blue-chip NSE Nifty 50 Index up as much as 1.2%.
Macquarie said the stock was being supported by expectations that the report removes the overhang that Kotak will buy Yes Bank.