FIIs revive interest in bank stocks

Market players look again at bank stocks as attractive bets.

Riding high on the resurgence in interest from foreign institutional investors (FIIs) and some ambiguous yet promising words emanating from the finance ministry, bank stocks are back in action.

Bulk investors are picking up substantial chunks of bank stocks in bulk deals. Over the last one week alone, deals worth Rs 245 crore have been concluded.

Apart from Barclays' purchase of a 4.30 per cent stake in UTI Bank for Rs 135 crore, HSBC Equity Fund and HSBC Global Fund have acquired 1,725,100 shares of Oriental Bank of Commerce (OBC) in a deal worth Rs 40.79 crore.

While Merrill Lynch Capital was a seller on the OBC counter, it was a bulk buyer in the ING Vysya Bank stock. The block deal for 506,000 lakh shares at Rs 311 per share totalled Rs 15.74 crore.

And, in two separate deals, Citigroup Global Markets has picked up 4.5 million shares of Bank of Rajasthan at an average price of Rs 37 a share. Goldman Sachs Investment picked up another 600,000 shares on September 16 at Rs 38 per share.

In Kotak Mahindra Bank, CLSA Merchant Bankers and ABN Amro Mauritius have bought shares worth Rs 37.63 crore in bulk deals, at an average price of Rs 180 per share from the FII, Sloane Robinson.

Taking a hint from the sudden FII activity in bank stocks, the markets have again started looking at bank stocks as an attractive bet. The market cap of 18 private sector banks has increased 4.5 per cent in the last one week to Rs 45,408 crore today and 9.3 per cent in the last one month.

According to market analysts, bank stocks which were ignored in the recent rally, are seeing value buying. The head of research of a domestic broking firm said, "Bank stocks had underperformed (the headline indices) in the recent rally but now with credit showing signs of a pick up, investors are looking at a growth story in bank stocks."

In yesterday's trading, the State Bank of India was up 2.66 per cent to Rs 492.85, ICICI Bank was up 2.25 per cent to Rs 295.25, while HDFC Bank was up 1.45 per cent to Rs 411.60.

Other notable gainers include UTI Bank which was up 1.24 per cent to Rs 130.30, Canara Bank was up 5.56 per cent to Rs 158.45, Oriental Bank Of Commerce up 3.80 per cent to Rs 250, Kotak Mahindra Bank up 0.17 per cent to Rs 181.30 and ING Vysya Bank up 0.66 per cent to Rs 312.10.