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Interest perks up in bank stocks on Budget hopes

Jayanta Mallick

KOLKATA, Feb. 27

Bank stocks, particularly those of private banks, rode a second upward wave this week in view of Budget expectations. The market is looking forward to lowering of interest rate on small savings, further clarifications on FDI norms in banks and improvement in credit offtake in the forthcoming fiscal triggered by spending in infrastructure and housing sectors.

According to Mr Mathew Easow of Mathew Easow Analysis Securities, some of the private banks look positively takeover candidates.

``Select scrips such as South India Bank, Vysya Bank, Centurion Bank, HDFC Bank and ICICI Bank have seen a good run-up in the last two weeks,'' Mr Ajay Jaiswal pointed out. However, he felt that the current run was for a short haul.

Mr Ajit Day of Dayco Securities echoing similar sentiment said the market valuations of the private banks were proportionate to their return expectations. ``It is very unlikely that profitability or reach of these banks would change very quickly. Neither would the sector be flooded with flow of FDIs overnight,'' Mr Day opined.

However, Mr Bhaskar Ghosh, MD of IndusInd Bank, felt that on profitability and NPA criterion private banks were better poised than PSU banks. ``But the FDI flow would largely depend on complete clarity on the norms on limits. There are different ceilings for FIIs and promoters too. The Government needs to clarify the foreign investment in its totality,'' Mr Ghosh added.

Among the private banks -- Vysya Bank closed the day at its two-month peak of Rs 233.9 (Rs 226.65) on the NSE with a volume of 1.47 lakh shares.

HDFC Bank finished at Rs 236.9 (Rs 236.2) with a volume of 81,796 shares.

The South India Bank, Centurion and IndusInd Bank also closed higher.

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