The Federal Bank scrip on Tuesday closed higher at Rs 150.95, up by 1.55 per cent. Earlier in the day, it rose 4.20 per cent to Rs 154.90. It then hit a high of Rs 156. A total of 3.4 lakh shares changed hands on the BSE.
Federal Bank has been the subject of intense activity by operators, and has risen 63 per cent since April 30, 2003.
Market buzz for sometime has been that the bank is a prime candidate for merger or acquisition and this has prompted accumulation by market players.
The market sees Federal Bank as a veritable takeover target. Market dealers said that operators have been keenly pursuing second-rung private banks of late after Bank of Muscat acquired a 26 per cent stake in Centurion Bank for Rs 75 crore.
The move set off expectations that large multinational banks may expand base in India through acquisition of private sector banks.
Earlier, the government hiked the foreign direct investment limit in private sector banks from 49 per cent to 74 per cent.
This may have prompted solid interest in Indian private sector banks by multinational companies eager to expand.
The banking sector, as it is, is in the limelight following the impressive performance registered by most banks and the bright prospects seen for these.
Also, the weak technology sector has prompted investors to shift portfolio to banking stocks.
