NEW DELHI: Public sector bank stocks were in high demand in the final hour of trading hour of Tuesday amid speculations of stake sale by the central government.
Shares of five lenders - Central Bank of India, Indian Overseas Bank (IOB), UCO Bank, Punjab & Sind Bank (PSB) and Bank of Maharashtra (BoM) – surged in double-digit figures on news that the Centre has approved a fundraising plan via the qualified institutional placement (QIP) route.
The fundraising, as per a report, will be executed in small tranches beginning in the fourth quarter of the financial year 2024-2025 (Q4 FY25).
At the end of the December 2024 quarter, the government held a 79.6% stake in BoM, 98.25% stake in PSB, 96.38% stake in IOB, 95.39% stake in UCO Bank and 93.08% stake in Central Bank.
The stake sale is likely to be part of the exercise to meet the minimum public shareholding (MPS) norm. As per existing norms, all listed companies must maintain an MPS of 25%.
The government had previously extended the deadline for the MPS norm for central public sector enterprises and public sector financial institutions till August 2026.
Central Bank shares soared 20% on Tuesday to hit its upper circuit level of Rs 56.24. IOB shares settled 19.56% higher at Rs 54.34 while UCO, PSB and BoM shares surged 18%, 14.67% and 12.26%, respectively. The Nifty PSU Bank index moved higher by 4.20%.
Domestic equity market benchmarks - BSE Sensex and NSE Nifty50 - snapped their 4-day losing streak on Tuesday. The 30-share Sensex closed 169.62 points, or 0.22%, higher at 76,499.63 while the Nifty50 gained 90.10 points, or 0.39% to settle at 23,176.05.