Shares of Kotak Mahindra Bank, Axis Bank and Yes Bank saw some selling
pressure on Friday amid uncertainty over the new composite foreign
direct investment (FDI) norms.
Shares of these banks had surged between 3-4 per cent on Thursday after the Cabinet approved a composite cap for foreign portfolio investment (FPI) and foreign direct investment (FDI). It was hoped that the new norms would give more headroom for foreign institutional investment (FII) in banks. It was also expected some banks may feature among MSCI global indices, leading to buying demand from global funds.
Kotak Mahindra Bank and HDFC Bank rose to new all-time highs of Rs 743 and Rs 1,119 on Thursday.
Introduction of the composite caps on foreign investment meant that the government would not distinguish between various forms of foreign investments up to the sectoral caps. However, a Press Trust of India report, quoting officials said that though all foreign investments like FIIs and FDI are being clubbed for limiting the sectoral cap, its applicability on FII investment in banking would be subject to sectoral caps.
Currently, total foreign investment allowed in banking sector is up to 74 per cent, while foreign institutional investors (FIIs) are limited to take up to 49 per cent stake.
At 9:48 a.m., shares of Kotak Mahindra Bank and Yes Bank were down nearly 1.5 per cent while Axis Bank was down nearly 1 per cent. In comparison, the Nifty was flat.
Shares of these banks had surged between 3-4 per cent on Thursday after the Cabinet approved a composite cap for foreign portfolio investment (FPI) and foreign direct investment (FDI). It was hoped that the new norms would give more headroom for foreign institutional investment (FII) in banks. It was also expected some banks may feature among MSCI global indices, leading to buying demand from global funds.
Kotak Mahindra Bank and HDFC Bank rose to new all-time highs of Rs 743 and Rs 1,119 on Thursday.
Introduction of the composite caps on foreign investment meant that the government would not distinguish between various forms of foreign investments up to the sectoral caps. However, a Press Trust of India report, quoting officials said that though all foreign investments like FIIs and FDI are being clubbed for limiting the sectoral cap, its applicability on FII investment in banking would be subject to sectoral caps.
Currently, total foreign investment allowed in banking sector is up to 74 per cent, while foreign institutional investors (FIIs) are limited to take up to 49 per cent stake.
At 9:48 a.m., shares of Kotak Mahindra Bank and Yes Bank were down nearly 1.5 per cent while Axis Bank was down nearly 1 per cent. In comparison, the Nifty was flat.
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