Axis Bank Ltd. and Kotak Mahindra Bank Ltd. led the S&P BSE India Bank Index higher in Mumbai after the government said it is considering rule changes that may let overseas investors buy more stock in private-sector banks.
Axis Bank climbed 4.8 percent to 611.90 rupees at 2:24 p.m. local time, while Kotak Mahindra gained 4 percent to 741.40 rupees. Yes Bank gained 3.7 percent while the Bankex index, a gauge for 10 lenders, rose 2 percent to a four-month high.
The cabinet has approved plans to review the caps on foreign institutional investment in Indian companies, Finance Minister Arun Jaitley told reporters Thursday. In a budget speech in February, Jaitley said that the ceiling could rise to 74 percent from 49 percent for private-sector banks’ domestically traded stock.
A higher cap could lead to private banks being added to MSCI indices or getting higher weightings, leading to more demand for their shares, P Karthikeyan, a Chennai-based banking analyst at Cholamandalam Securities Ltd., said by phone.