BENGALURU (Reuters) – Indian stocks jumped more than 1% on Thursday, driven by a surge in financials for a second day as some investors found value in beaten-down banking stocks, while a broadly positive global mood also helped the rally.

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The NSE Nifty 50 index rose 1.25% to 9,431 by 0516 GMT, while the S&P BSE Sensex gained 1.18% to 31,973.

On Wednesday, Indian shares ended over 3% higher, fuelled by a more than 7% surge in the banking index.

“The banking stocks have been a major underperformer and drag in the Indian markets. Some stocks hit fresh lows and traders chipped in and sought bargains,” said Saurabh Jain, assistant vice president of research at SMC Global Securities in New Delhi.

“There are concerns with respect to the banking sector and the delinquency which is going to rise. This surge mostly looks like a small bounce,” Jain added.

Positive global cues and institutional buying in domestic private banks also forced investors to cover their short positions leading to the surge, analysts said.

The Nifty banking index, which has fallen about 40% so far this year, gained 3.1% on Thursday.

India may need to inject up to 1.5 trillion rupees ($19.81 billion) into its state-owned lenders as their pile of soured assets is expected to double during the coronavirus pandemic, three government and banking sources told Reuters.

Meanwhile, Asian shares and U.S. stock futures rose on Thursday as growing optimism about economic recovery from the pandemic trumped immediate concerns about a standoff between the United States and China over Hong Kong.

HDFC Bank Ltd and Housing Development Finance Corp Ltd rose 3.7% and 3.4%, respectively and were the top boosts to the Nifty 50 index.

Shares in IndusInd Bank Ltd surged 8.3%, while Axis Bank Ltd rose 4%, leading gains in the banking index.