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It’s a private party for now

Mumbai, Dec. 3: The stock markets have started re-rating many private sector banks following Hong Kong and Shanghai Banking Corporation’s (HSBC’s) acquisition of a 14.71 per cent stake in UTI Bank Ltd.

The UTI Bank scrip hit the circuit filter on the exchanges today, with market analysts pointing out that the stock at its current price is under-valued compared with its peers.

However, the closing price of UTI Bank at Rs 114.10 has made the proposed open offer by HSBC unattractive for other UTI Bank shareholders. The bank scrip, after opening at Rs 94, was stuck at the upper circuit throughout the day. The counter witnessed 1,906 trades yielding a turnover of Rs 5.72 crore.

The open offer price for 20 per cent of the bank shares at Rs 90 is at a discount of 21 per cent to its closing price on the Bombay Stock Exchange today. Analysts are not ruling out the possibility of a further appreciation in the share price of UTI Bank in the days to come.

Even as UTI Bank shares rose 19.98 per cent, the HSBC deal generated a huge interest in a host of bank scrips. The other banks’ counters that traded well included ICICI Bank, HDFC Bank, Global Trust Bank, Federal Bank, Karur Vysya Bank, Kotak Bank, IndusInd Bank and South Indian Bank.

ICICI Bank scrips spurted by 8.77 per cent to finish at Rs 287.50, a gain of Rs 23.20 over its previous close. HDFC Bank gained by Rs 10.45 to Rs 328.70, while Global Trust Bank ended firm at Rs 25.70 after opening at Rs 22.50 and rising to an intra-day high of Rs 26.

Market analysts added that scrips of Federal Bank, Kotak Bank, Karur Vysya Bank and IndusInd Bank also witnessed brisk activity. While Federal Bank was stronger by Rs 9.05 to Rs 200.05, Kotak Bank ended at Rs 371.90 after opening at Rs 367 and IndusInd Bank closed at Rs 40.30 after opening at Rs 37.50.

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