Financial Daily from THE HINDU group of publications
Thursday, Dec 04, 2003
Financial Daily from THE HINDU group of publications Thursday, Dec 04, 2003 |
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Markets
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Stock Markets Money & Banking - Stocks Consolidation boosts bank stocks Jayanta Mallick
Kolkata , Dec. 3 THE stock market once again begun betting on the private bank stocks triggered by a series of news related to consolidation in the sector. In the recent weeks, first the possibility of merger of Ashok Leyland Finance with IndusInd Bank became a talking point. Then came the buzz that Reliance Capital was considering entry into the sector. This was followed by a huge block deal in ICICI Bank counter. HSBC's acquisition of substantial stake in UTI Bank has led the punters banking on private bank stocks today.
The ICICI Bank stock shot up to Rs 287.50 from Rs 264.30 on the Bombay Stock Exchange. UTI Bank was up at Rs 114.10 (Rs 95). HDFC Bank closed at Rs 328.70 (Rs 318.25), IndusInd Bank at Rs 40.30 (37.15) and City Union Bank finished at Rs 59.05 (Rs 56.45). Global Trust Bank was up 17.05 per cent, IDBI Bank 8.72 per cent, Centurion Bank and Bank of Rajasthan moved up 7 per cent, Federal Bank 4.38 per cent and Karur Vysya Bank was up 4.38 per cent. While IndusInd, Federal Bank, Bank of Rajasthan and Karur Vysya created their new peaks, UTI Bank, ICICI Bank and HDFC Bank hit their all time highs. Traded quantity in these stocks also jumped in line with increase in demand. According to senior bankers, the increasing pressure on margin is forcing the banking sector towards consolidation.
Mr K.P. Padmakumar, Chairman of The Federal Bank told Business Line that the pressure on the interest margin has pushed banks to a volume game. "In the recent months, the action on the treasury front has also slowed down because of flat yield curve. The credit offtake in the industrial sector in the last 8 months of this fiscal has not grown much. There is certain buzz and anticipation in the power and road sectors. However, progress of the road projects in certain regions has been slow and blocked credit offtake growth. The thermal power, housing, car finance and rent securitisation are providing the volumes for the banks. Thus everybody is attempting to expand the size of their balance sheets and quickest route to that is inorganic growth". Mr S.S. Kohli, CMD of the Punjab National Bank, also felt that consolidation was an imperative along with use of technology and reduction of cost because of thinning spread. According to Mr Devarsh Vakil of Anagram Stockbroking, the expectation of hike in FDI to 74 per cent from 49 per cent is also driving the private bank stocks. "The lean and mean private banks are considered more competitive, hence either can be a target or can target others for consolidation," he added.
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