PSU Bank Stocks Rise Up To 1.5% As Centre Mulls Raising Foreign Investment Cap To 49% | Markets News

Banking Stocks Rally

Public sector bank stocks advanced on October 28 after a Reuters report suggested that the Indian government plans to more than double the foreign investment cap in state-run lenders to 49 percent. The development lifted sentiment across the sector, pushing the Nifty PSU Bank index over 1.6 percent higher in early trade.

The index hit an intraday high of 8,118.95 before trimming gains to 8,049.05 (up 0.7 percent) around 9:50 am.

According to Reuters, the Ministry of Finance has been in talks with the Reserve Bank of India (RBI) for the past few months to raise the limit on direct foreign investment in public sector banks to 49 percent. The move is aimed at helping PSU banks attract more overseas capital over the coming years. (News18 could not independently verify the report.)

The report comes at a time when global investors have shown rising interest in India’s private lenders. Earlier this year, Japan’s SMBC agreed to acquire a 20 percent stake in Yes Bank for $1.6 billion, while last week Blackstone announced a $705 million investment for a 9.9 percent stake in Federal Bank, becoming its largest shareholder.

Among PSU banks, Indian Bank gained nearly 1.5 percent, Union Bank of India rose over 1 percent, while Bank of Maharashtra and Punjab National Bank climbed close to 1 percent each. Shares of SBI, Canara Bank, Bank of Baroda, and UCO Bank also traded higher. However, Central Bank of India and Indian Overseas Bank edged slightly lower.

The Nifty PSU Bank index also extended its rally for a second straight session, after surging over 3 percent on October 27 to hit a high of 8,053.40 before closing more than 2 percent higher at 7,990.65.