IDBI Bank share cost surged 15 per cent to Rs 43.50 apiece in intraday on BSE on Thursday, soon after the Cabinet Committee on Economic Affairs gave its in-principle approval for strategic disinvestment along with transfer of management handle in IDBI Bank. On the back of heavy volumes, IDBI Bank stock was trading 8 per cent greater at Rs 40.90 apiece in late morning bargains. Round 76.04 shares of IDBI Bank exchanged hands on BSE, even though a total of 8.3 crore IDBI Bank stocks have traded on NSE so far in the session.
According to an analyst, the Cabinet approval for IDBI Bank’s divestment is a positive step as the private or foreign entity could infuse superior management, technologies and new funds which could thereby increase the Bank’s prospects. “Technically, 42-48 levels should be used by investors to exit or book profit and re-enter only near 36 levels for higher profits,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told TheSpuzz Online.
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The extent of respective shareholding to be divested by government and LIC shall be decided at the time of structuring of transaction in consultation with the Reserve Bank of India, IDBI Bank mentioned in an exchange filing. The central government and LIC collectively personal 94.72 per cent of the equity of IDBI Bank (Government 45.48 per cent, LIC 49.24%). LIC is presently the promoter of IDBI Bank with management handle and GoI is the co-promoter.
So far in intraday, IDBI Bank share cost has touched an intraday higher of Rs 43.50 apiece and an intraday low of Rs 40.15 apiece on BSE. In comparison, S&P BSE Sensex was trading volatile at about 48,670 levels. LIC’s Board has also passed a resolution to the impact that LIC may well decrease its shareholding in IDBI Bank by means of divesting its stake along with strategic stake sale envisaged by the government with the intent to relinquish management handle and by taking into consideration cost, industry outlook, statutory stipulation and interest of policyholders. This choice of LIC’s Board is also constant with the regulatory mandate to it to decrease its stake in the Bank.
However, the All India Bank Employees Association (AIBEA) has opposed the government’s move to privatise IDBI Bank. The association mentioned the government should really handle a minimum of 51 per cent share capital of the bank.