Bank stocks in focus on ICICI-BoR deal

During the week, shares of select banks like Karnataka Bank, Dhanalakshmi Bank, Federal Bank and IndusInd Bank outperformed the broader market and soared by up to 10 per cent against a fall of 3.23 per cent in the Sensex.

Scope for mergers
“There is enough scope for mergers and acquisitions in the small and medium banks, as the stock of these banks are fairly valued. One has to keep in mind that a major chunk of business comes from the rural sector of small banks, which may give a positive impact to the bank that acquires it,” CNI Research Chairman and Managing Director Kishor P Ostwal said.
The banks which outperformed the broader market index were Federal Bank (7 per cent), Lakshmi Vilas Bank (5), South Indian Bank (6.4), IndusInd Bank (3) and Karnataka Bank (10 per cent).

During the week, shares of Bank of Rajasthan gained 74 per cent on the BSE to settle at Rs 144.40 at the end of Friday’s trade.  “This will definitely raise hopes for mergers and acquisitions in the banking space. The agreement between the BoR and ICICI Bank has also fuelled hopes of similar arrangements among the other peer group of banks,” SMC Capital Vice-President Rajesh Jain said.
Press Trust of India