Bank scrips shoot up in a falling market

MUMBAI, NOV 16: The government move to bring down its stake in public sector banks from 51 per cent to 33 per cent boosted bank shares on Thursday. While the benchmark Sensex fell by 45 points, shares of leading banks were cornered by investors, leading to a flare-up in their prices.

Stocks four leading bank stocks hit the first upper circuit of eight per cent and rose further. The buying spree in banking stock was so severe that six out of the top ten gainers were bank stocks. Corporation Bank was the star performer gaining almost 10 per cent to close at Rs 92.30. It was followed by Bank of Baroda which spurted by 9.72 per cent and closed at Rs 49.10. Oriental Bank of Commerce gained nine per cent and closed at Rs 36. IDBI gained 8.45 per cent to close at Rs 37.20. Bank of India also hit the upper circuit and closed at Rs 11.85. ICICI Bank also rose by 5.74 per cent to close at Rs 150.95.

There are 19 banks in which the government hold the entire equity or the majority of equity. Up to 1994, the entire paid-up capital in nationalised banks was held by the government. In 1994, an amendment enabled banks toaccess the market to meet additional capital requirements. Six nationalisedbanks have so far gone in for public issues. “With the equity dilution, there will be less government control on these banks…. this is expected to improve their overall performance,” brokers said.

“Sustained profit-taking by market participants and unwinding of position by operators shaved of early gains in other stocks,” said a dealer. The BSE Sensex opened steady at 3946.83 and later fluctuated in a narrow range of 3971.32 and 3884.88 before closing at 3901.90 as against yesterday’s close of 3946.53, netting a substantial fall of 44.63 points.