Market Watching GTB, Private Bank Stocks

Mumbai, July 25 | Updated: Jul 26 2004, 05:59am hrs
All eyes will be on private bank stocks on Mondays trading, following the Centres decision placing Global Trust Bank (GTB) under a three-month moratorium.

While some dealers say the decision, taken after the Reserve Bank of India (RBI) filed an application, is unlikely to take its toll on the stock price of frontline private banks, others say select tier-II and tier-III banks might feel the heat.

An analyst at a domestic brokerage said: The stock price of other private sector banks is likely to remain immune to this news as the poor health of GTB is not a secret in the market.

However, Rajesh Jain, CEO, Pranav Securities, didnt rule out the contagion impact on other tier-II and tier-III banks: The GTB stock will be affected on Monday. In fact, private sector banks as a whole may come under a shadow, following concerns over the performance of some. Tier-II and Tier-III banks may also face problems of generating funds as investors will think before investing in these smaller banks, Mr Jain added.

The poor health of GTB is well-known among market players and investors are prudent enough to separate GTBs related problems from other private banks, an analyst at IL&FS Investsmart said. The bank has, till date, even failed to unveil its FY04 results and this is also a clear hint of the health of the bank, dealers pointed out.

Sashi Krishnan, CEO, Cholamandalam AMC, said: I dont think this is going to impact the stock prices of other private banks. People already had concerns about the health of GTB.

On Friday, the stock of GTB closed down 0.53 per cent at Rs 13.17. However, during the past week, the stock had gained 16.34 per cent. The moratorium was announced on Saturday, and hence didnt impact the market.

During this period, depositors of GTB will be permitted to withdraw up to Rs 10,000 from their savings bank account or current account or any other deposit account through any of the branches of the bank.