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Thursday, Sep 30, 2004

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Federal Bank stock recovers marginally

Veena Venugopal

Mumbai , Sept. 29

THE boardroom drama of Federal Bank has thrown the stock into a roller coaster tizzy over the last few days.

On Tuesday, with the news of the resolutions proposed by the bank in the AGM and the defeat of ICICI Bank supported Directors, the stock lost Rs. 24.70 on the BSE.

Subsequently, with some news of stability and the announcement of the final list of Directors, the share recovered marginally in Wednesday's trade, on both the exchanges.

On the BSE, the scrip opened at Rs 300 and touched a high of Rs. 307.90, before closing the day's trade at a marginal high of Rs 300.45.

On the NSE, the stock registered an appreciation of 1.32 per cent during Wednesday's trade. It opened at Rs. 296.55 and raced to a high of Rs. 308.90, ending at Rs. 300.45.

Volumes on the BSE crossed 2 lakh on Tuesday. Wednesday's volumes were moderate 90,600.

On the NSE, volumes were nearly half of that of Tuesday.

Analysts assert that the fundamentals of the bank have not changed and, hence, their positive outlook on the scrip would continue.

"What will happen next is anybody's guess, but fundamentally nothing about the bank or its business has changed. If ICICI Bank-supported Directors were back on the board, the market would view it positively. Otherwise, there could be scope for some correction in the share," said the head of research of a broking firm.

Incidentally, ICICI Bank has obtained a stay order from the Company Law Board (CLB) against all the resolutions that were put to vote at the Federal Bank AGM on Monday.

ICICI Bank currently holds about 20 per cent stake in Federal Bank. The latter has been given time up to October 7 to file the reply, and up to October 15 to file a rejoinder, if any. The hearing will be held on October 18. Brokers say that the market would prefer to follow a wait and watch policy till a definitive solution is reached.

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