MUMBAI : Banking stocks gained on Tuesday, with the Bankex Index surging for three out of four sessions, tracking a jump in local equity markets.

The BSE Bankex Index gained 1% on Tuesday from its previous close, while India's benchmark Sensex rose 1% to 48,889 points.

Since 20 April, the Bankex Index has climbed nearly 5% while the Nifty Bank index advanced 4.8%. Benchmark Sensex index gained over 2.3%, while Nifty rose 2.2% led by positive global equity markets.

Earlier, from 1 April to 12 April, Bankex fell by over 12%, while Sensex lost nearly 7 percent after continued rise of covid cases and the imposition of many restrictions by different states. There was fear in the market that it might adversely affect the collection efficiency and the asset quality stress may aggravate further, analysts expected.

"Decent results by ICICI and stable performance by HDFC Bank have given the markets an indication that too much pain is already discounted in the prices. We believe the top 3-4 private banks will be stable since they are sufficiently capitalized and have shown tremendous resilience in tough times," said Mohit Nigam, head, PMS and advisory, Hem Securities.

Earlier last week, ICICI Bank Ltd and HDFC Bank Ltd reported earnings. ICICI Bank reported 260% surge in net profit, while net interest income advanced 17%. Asset quality for the quarter improved 46 basis points quarter-on-quarter (q-o-q) to 4.96% from 5.42%. Operating profit grew 16%, while advances rose 14%.

Meanwhile HDFC Bank's operation growth continued to show improvement for past three quarters as advances were up 4.7% q-o-q, NII growth at 12.6% year on year (y-o-y) while net profit increased 18.2% y-o-y. Asset quality improved to 1.32% from 1.38% a quarter ago.

Analysts say the focus on operational growth with strong revival in retail advances remains positive for both banks. Robust asset quality performance amid tight underwriting standard and contingency buffer provides comfort against uncertainties in the current environment, analysts add.

Since 20 April, among banking stocks, ICICI Bank rose 7.2%, Axis Bank climbed 7.6%, State Bank of India went up by 6.3%, and HDFC Bank and IndusInd Bank rose over 3?ch.

"With various steps taken by the government to curb the spike and with vaccination opening for all from 1 May, there is hope that the current covid situation may come under control by mid-May. It has already started reflecting in Mumbai where the cases came down over the past few days," said Hemang Jani, head, equity strategy, broking and distribution, Motilal Oswal Financial Services Ltd.

"Further good results from HDFC Bank and ICICI Bank and strong management outlook, presented a good buying opportunity for investors, especially post a good correction witnessed. Benign US bond yields also lent support. Thus, we are seeing banking stocks bouncing back over the past two days," Jani added.