Axis Bank Rise to Record as Rules Allow More Foreign InvestmentAnto Antony
Axis Bank Ltd. and Yes Bank Ltd. shares rose to records in Mumbai after the government proposed a rule change that will allow overseas investors to buy more stock in private-sector banks.
Axis Bank climbed 4 percent to 637.25 rupees at 12:40 p.m. local time, while Yes Bank gained 1.4 percent to 873.65 rupees. Yes Bank earlier increased 3.1 percent, on track for a record close. The S&P BSE Bankex index, a gauge for 12 lenders, rose 1 percent to a one-month high.
In his budget speech Saturday, Finance Minister Arun Jaitley said he will raise the amount foreign institutional investors can own in private-sector banks’ domestically traded stock to 74 percent from 49 percent. That would match the level foreign investors can currently own in a private-sector bank’s overseas traded securities.
“With further headroom for foreign investors, this rally will gather more legs,” P Karthikeyan, a Chennai-based banking analyst at Cholamandalam Securities Ltd., said by phone.
The rule change needs parliamentary approval by May 8, which is when the current budget session is due to end.
The new limit will probably give Axis Bank a 4 percent representation in the MSCI India Index and Yes Bank a weighting of 1 percent, CLSA Ltd. said in a Feb. 28 note to clients. The two banks are currently not represented on the gauge and investors whose stock portfolios mirror the index will need to buy shares to reflect their new weightings.
Foreign institutional investors held 48.52 percent of Axis Bank and 46.3 percent of Yes Bank at the end of last year, exchange filings showed.