Business Daily from THE HINDU group of publications
Tuesday, Aug 21, 2007
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Business Daily from THE HINDU group of publications Tuesday, Aug 21, 2007 ePaper |
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Stock Markets Markets - Stocks
Priya Nair Mumbai, Aug. 20 Most banking shares gained on the BSE after the US Federal Reserve cut the discount rate by 50 basis points to improve liquidity. This move by the US regulator helped improve sentiments in the domestic equity market, said analysts. Among the big gainers was ICICI Bank, which gained 5.57 per cent to close at Rs 871.95, against the previous close of Rs 825.95 on the BSE. It touched a high of Rs 884.75 during trade. 
Shares of ICICI Bank gained after the government approved the bank’s proposal to sell 24 per cent stake in its wholly owned subsidiary, ICICI Financial Services, to foreign investors. This newly formed subsidiary is the proposed holding company for its insurance and asset management ventures. According to analysts, this is a positive development for ICICI Bank because now the capital required for expanding its insurance and mutual fund business can be raised from the market and the bank need not invest in these businesses. An analyst who tracks banking sector said, “For ICICI Bank the upside is more from the insurance point view, because its insurance business is close to breaking even.”
Among the other private banks that saw a rise in their share price was HDFC Bank, which gained 5.21 per cent and closed at Rs 1,125 against the previous close of Rs 1,069.25. Axis Bank, till now UTI Bank, was up 5.10 per cent and Kotak Mahindra Bank was up 8.14 per cent. Public Sector Banks lag
Nationalised banks did not gain as much as their private sector counterparts. State Bank of India, the largest public sector bank, closed 2.04 per cent up, at Rs 1550.45 against Rs 1519.5. Bank of India was up 2.59 per cent and Union Bank of India gained 2.55 per cent. According to Ms Sarika Lohra, banking analyst with Angel Broking, private sector banks have seen major institutional buying compared to the public sector banks. Though the banking sector continues to be hampered by concerns such as high non-performing assets, especially in retail loans, this will not affect their profitability, as most banks have made significant improvement in their core performance, analysts said. There is still lack of clarity on the liquidity front, though the banking sector does not seem as volatile as earlier, from the market perspective, Ms Lohra added. Most banks have a healthy balance between non-interest income and treasury income and also not as inclined towards the latter as before, she explained.
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