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Associate banks in limelight after the deal

Mumbai , March 14

Foreign institutional investor CLSA bought 34.45 lakh shares of State Bank of India (SBI) at Rs 1,070 a share, which is at a 14.72 per cent premium from Monday's close of Rs 928.85 on the BSE, triggering investor interest in the top PSU bank and its associate banks — State Bank of Travancore (SBT), State Bank of Bikaner & Jaipur (SBBJ) and State Bank of Mysore (SBM).

CLSA Mauritius bought the shares in BSE's institutional segment, where foreign funds trade when their cumulative stakes are near the permissible limit of 20 per cent, dealers said.

Immediately after the deal, the SBI stock soared to its 52-week high on the BSE to Rs 976.85, before settling at Rs 954.60, higher by 2.77 per cent from Monday's close.

On NSE, the shares closed at Rs 953.90, up by 2.78 per cent from Monday. Over 1.2 crore SBI shares were traded on both the exchanges.

Dealers said other factors, including the proposed stock split in SBI, a follow-on issue in July and a reduction in the face value of the associate banks also meant that these counters attracted strong buying.

"There are several positive triggers expected in SBI and its associate banks in the coming days and weeks," said Mr Deepak Jasani, Head of Retail Research, HDFC Securities.

A proposal to hike the limit of 200 shares for non-corporate shareholders in associate banks is also on the cards, dealers said.

Shares of SBT went up sharply by five per cent to Rs 3,662.30 on Tuesday while SBBJ ended higher by 4.79 per cent at Rs 3,690. State Bank of Mysore closed at a 52-week high at Rs 5,775, an increase of 8.56 per cent from Monday on the BSE. "There is a renewed interest in SBI and its associate banks," said Mr Gaurang Shah of Geojit Financial Services.

Though the stock was not able to sustain the Rs 980-levels on Tuesday, there was a feeling that the stock could go up to Rs 1,075-levels in the short-term, he said.

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