Smaller PSBs see a surge in trading volumes in anticipation of privatisation

MUMBAI: State-run banks, particularly the smaller lenders comparable to , and Indian Overseas Bank, are seeing a surge in trading volumes in anticipation of their privatisation.

But specialists urge warning as privatization of banks doesn’t have too many precedents.

“Select low value public sector bank stocks are surging on expectations of privatisation after the announcement in the Union Budget,” said Deepak Jasani, head of retail research at HDFC Securities. “Until we see some roadmap of the process and identification of banks, one should be careful in getting excited about these stocks as operators could resort to ‘pump and dump’.”

Central Bank of India shares recorded trading volumes of Rs 19 crore on Wednesday and Rs 14 crore on Thursday. These evaluate with about Rs 40-45 lakh value of normal transactions.

Independently, these banks might not be out of bother in phrases of their income development and asset high quality, prompting analysts to evaluate the rationale behind the surge in curiosity and costs.

ET Bureau

“One wonders about who all would have an interest in shopping for out these banks and beneath what phrases,” stated Jasani.

BSE Bankex, a sector gauge, fell greater than 2 % since February 15. But, all these 4 shares have surged in the vary of 50-72 % in simply 4 trading periods.

Bank of India shares exchanged palms ensuing in complete each day trades in the vary of Rs 4.50-10.5 crore previous two days. Those had been thinly traded with each day volumes hovering round Rs 38-40 lakh per day on and earlier than February 15.

Analysts say that

and BPCL is likely to be among the many first to be privatized. If these two don’t occur in the following few months, the passion on PSU banks could not final. The authorities has clarified that it has not but finalised the financial institution privatisation candidates.

“Speculative bets are fast rising amid hopes of privatisation,” stated Ashutosh Mishra, banking analyst at Ashika Stock Broking. “Retail investors should remain cautious as the rumour mill is running fast. Liquidity of these stocks can pose a challenge at any time once the exuberance is over.”

Indian Overseas Bank too witnessed secondary market trades in the vary of Rs 3-12 crore in previous three days, a number of occasions greater than the same old volumes.

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