Stock markets on Friday rallied by over one per cent driven by upbeat global cues, recovering rupee and a surge in Kotak Mahindra Bank shares on reports that Berkshire Hathaway may pick up a stake in the lender. Despite election uncertainties, the BSE Sensex rallied 361.12 points, or 1.02 per cent, to close at 35,673.25. Similarly, the broader NSE Nifty jumped 92.55 points, or 0.87 per cent, to 10,693.70.
Shares of Kotak Mahindra Bank soared nearly 13.86 per cent intra-day on Friday amid speculation that legendary investor Warren Buffett’s Berkshire Hathaway Inc was planning to pick up a stake in the private sector lender in a multi-billion dollar deal. While the bank was non-committal on reports in this regard, saying it was not aware of any plans by Berkshire Hathaway to buy stake, any such deal would help Kotak Mahindra Bank meet the RBI’s ownership norms. The stock finally closed 8.53 per cent higher to settle at Rs 1,282.25 on the BSE.
The market was agog with speculation that Berkshire Hathaway may pick up 10 per cent stake in Kotak Mahindra Bank, which currently commands a market capitalisation of Rs 244,548 crore, by buying promoter stake or through a preferential allotment, in a deal that could be valued anywhere between $ 4 billion and $ 6 billion. Replying to clarification sought by the stock exchanges about the media report, Kotak Mahindra Bank said it is “unaware of any plans by Berkshire Hathaway buying stake in the bank”.
As of September, Uday Kotak, vice chairman and managing director of Kotak Mahindra Bank held 29.73 per cent stake in the bank. The Reserve Bank has asked promoters of the bank to bring down their stake to 20 per cent by December 2018 and to 15 per cent by March 2020. The Indian rupee staged a mild recovery to close at 70.82, rising 8 paise against the US dollar in line with rally in domestic stocks and positive global cues.
Other stock gainers included Adani Ports, Bajaj Auto, Infosys, Asian Paints, Maruti, HUL, L&T, M&M, ICICI Bank and Reliance Industries, rising up to 3 per cent. Top losers were Sun Pharma, Coal India, Yes Bank, PowerGrid and NTPC, sliding up to 2 per cent.
Investors took positive cues from Asian and European equities after US Fed Chairman Jerome Powell signalled that the three-year tightening cycle was drawing to a close, and IMF chief Christine Lagarde said that the US was not likely to see an economic contraction in the near term.