SBI and group firms sizzle on Dalal Street

On a day when the benchmark Sensex came down by 76 points, the stocks of State Bank of India (SBI) subsidiaries shot up.

While the BSE Bankex inched down 90 points (0.02 per cent), SBI and its subsidiaries gained substantially on the back of the government's approval to the modification of the SBI Act.

State Bank of India (SBI) was up 2.75 per cent to Rs 974.1, whereas State Bank of Bikaner & Jaipur increased by 5 per cent to Rs 3,690.55, State Bank of Travancore moved up by 5 per cent to Rs 3,654 and State Bank of Mysore zoomed up by 20 per cent to Rs 5,481.4.

Mitesh Shah, assistant vice president at Brics PCG Sales said, "Earlier nobody could hold more than 200 shares in any of the State Bank subsidiaries. Going forward, this would be relaxed and the shares of the subsidiaries may be split. Moreover, there is a proposal to merge the subsidiaries with State Bank of India. The modification in the SBI Act was slated to happen at the beginning of the year. The budget did not bring the change and so meanwhile these stocks corrected. But now that the approval has come, the upswing in these stocks is expected to remain at least in the short-term, before they start moving in line with the markets, again."

Some analysts feel that uptrend in these stocks will continue. Moreover, their valuations are much lower compared with other public banks.

Performance-wise, State Bank subsidiaries have been doing well, even as they faced several constraints from an investor point of view.

Rakesh Kumar of Karvy Stock Broking feels, "The subsidiaries have good asset quality, strong regional presence and good technological backing."

However, owing to poor liquidity on the bourses and less visibility, the value in these stocks has not been coming out.