Bank of India shares surged Monday, hitting the maximum permissible daily upper limit, on expectations that New Delhi will privatise some government-owned lenders as part of its broader goal of boosting the financial health of the state-run banking system.
Bank of India shares hit the upper circuit of 20% during the day’s trading before shedding some of its gains to close at Rs 40.80 apiece, still up 18%.
“Select public sector banks are now back in flavour amid privatisation buzz,” said Sanjiv Bhasin, Director at IIFL Securities. “Investors are now seen rushing to capture any such rally that could even double their investments. The government seems to be pursuing reforms in the banking sector.”
India has taken baby steps toward privatising one or more state-run banks to make them stronger, likely undoing a legacy that started with the nationalisation of banks in 1969, ET reported on June 3.
A select group of top government functionaries has begun discussions on the proposal.
But the process may take time as the country is now busy battling the coronavirus-related crisis, which is likely to have a debilitating impact on the economy.
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