Small lenders gain; bank bill sparks M&A hopes
Reuters Market Eye - Shares in India's smaller private sector banks gain on hopes the banking amendment bill approved by parliament on Tuesday will spark consolidation in the sector.
The bill lays the groundwork for non-banking financial companies to win banking licences, sparking speculation they could look to purchase smaller lenders to expand their footprint in the sector.
"We think there is a high possibility that many of the new banks could consider acquiring older, smaller banks with large distribution networks such as Karnataka Bank, Federal Bank, etc," Bank of America Merrill Lynch said in a report.
Dhanlaxmi Bank (DNBK.NS) gains 3.4 percent, Karnataka Bank (KBNK.NS) gains 4.3 percent while Federal Bank (FED.NS) is up 4.4 percent.
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The BSE Sensex rose more than 1 percent on Thursday to its highest close in a month as stocks of blue chip companies such as ICICI Bank surged after exit polls predicted a strong showing for the key opposition party in state elections held recently. Full Article