The Telegraph
Since 1st March, 1999
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Banks’ day out in market

Mumbai, May 5: Bank shares sizzled on the fourth straight day of gains on the stock market, where the BSE sensex closed with a smart jump of 70 points at 6,359.65.

The trigger for the rally was Wednesday’s welter of reforms that promises to be a turning point in the history of banks and the way they would shape up in future. Most indices measuring the performance of bank stocks racked up gains not seen in recent months. On Dalal Street, the 30-share index has bounced back from its May 2 low of 6,140.97, having clawed back 218 points.

The surge on local bourses mirrored advances in Asia, where Hong Kong's Hang Seng Index gained 116.65 points and Taiwan's Weighted index jumped 123.82 points.

The breadth of the surge on the BSE was impressive, with 1,502 gainers pitted against 811 losers. Volumes looked up too, with shares worth Rs 1,935 crore changing hands compared with Rs 1,624.02 crore on Wednesday.

BSE’s bankex was stronger by 95.22 points, or 2.65 per cent, at 3,684.39. Investors scoured the market for banks that could find foreign suitors, a prospect brightened by the removal of the cap on voting rights in private banks.

Karnataka Bank gained 19.95 per cent at Rs 77.85, Federal Bank 14.54 per cent at Rs 167, Bank of Punjab 12.39 per cent at Rs 31.75, Bank of Rajasthan 10.17 per cent at Rs 54.15, ING Vysya Bank 8.86 per cent at Rs 166 and UTI Bank 5.22 per cent at Rs 243. In the public-sector pack, Bank of Baroda was in the spotlight with a gain of 9.56 per cent at Rs 192. Bank of India jumped 8.44 per cent to Rs 98.30, Canara Bank 7.37 per cent to Rs 188.75 and Corporation Bank 7.23 per cent to Rs 347.90. Analysts believe more bank reforms will be pushed through.

Market watchers are of the opinion that the government’s decision to lift the 10 per cent ceiling on voting rights ' irrespective of the stakes held by a foreign entity ' will spur bank consolidation. It would make small private banks more attractive to foreign ones.

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