Shares of private lender Federal Bank saw an impressive rally as it touched a 52-week high of Rs 129.75 per share.
Although the bank had little good news to report, was it really worth the jump?
It turns out that the rally today was driven by a 'speculative' news article. CNBC Awaaz published a report today wherein it said that Federal Bank and Kotak Mahindra Bank were considering a merger.
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The merger of these two giant private players sent investors into a buying frenzy as the shares of Federal Bank witnessed a gap up opening. But the same news was disapproved by the Bank.
“We wish to clarify categorically that the news report of a merger between Federal Bank and another private bank is speculative in nature. In this regard, we would like to state that there is no information available with the Company as of today, which is required to be reported under extant SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and which may have a bearing on the stock price of the Company," Federal Bank said in a filing today.
The Bank added that it is compliant with all SEBI norms and that any information which could influence the price of the stock will be disclosed by it.
Irrespective of its response, the shares performed well for the day. The share jumped 7.8% today as it experienced a share volume of 61 million. However, the bank's clarification on the matter drove down the prices as it closed at Rs 123.55 per share, up 3.55% today, a price level that the bank had last hit in November 2017.
Kotak Mahindra Bank's shares, on the other hand, witnessed a gap down opening to open at Rs 1911 per share. However, the bank's shares jumped 2.4% during the day as it reached Rs 1,957 per share during the day, a price level the stock was unable to climb back to since January 2022. It closed at Rs 1,937.90 per share, up 1%.
Despite the drive today, Federal bank continues to be a good investment. The bank has seen diversified growth across all segments, credit growth of 15-17% for the first time in 8-9 years, and an uptrend in NRI Remittances.
Moreover, the shares of the bank surged 32% in the last 2 months. Certain brokerages are giving the share a 'Buy' tag as its growth prospects appear bright.
Article by Aman Agarwal.
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