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Stocktwits - The Indian government is gearing up to reduce its majority stake in select Public Sector Banks (PSBs) as part of its long-term privatization and consolidation roadmap.
This move also ensures compliance with the Securities and Exchange Board of India’s (SEBI) minimum public shareholding norms, which mandate a minimum of 25% public ownership for listed companies.
SEBI-registered analyst Sanyam Vaish has highlighted five PSU banks and what traders should watch for.
He believes that the government’s plan to pare its stake will increase liquidity, attract institutional investors, and potentially lead to a rerating in the medium term for these banking stocks. However, investors are advised to monitor volumes and delivery spikes.
Bank of Maharashtra (NSE:BMBK) (BoM)
It stands out for its strong fundamentals and top efficiency ratios among PSBs, with the government holding over 86% stake.
This divestment could drive institutional interest & valuations for the bank. Vaish pegs support at ₹59 and ₹66 as a breakout zone.
Indian Overseas Bank (NSE:IOBK) (IOB)
Historically volatile, but it has been considered for its turnaround potential, according to Vaish. The government owns a 96% stake in this bank, and a stake sale could trigger a rerating if private capital enters.
He sees support at ₹39 and resistance at ₹45 for IOB.
UCO Bank (NSE:UCBK)
Recognised as a consolidation candidate with a strong rural reach, the government owns around 95.4% of the company.
A dilution of this stake could improve UCO Bank’s market float and volumes. Vaish pegs support at ₹32 and a breakout zone at ₹36.
Central Bank of India (NSE:CBI)
With its pan-India presence, this bank has been under consideration for privatization talks. The government owns nearly a 93% stake in the Central Bank of India.
Vaish recommends watching ₹44 for support and ₹51 (major hurdle) levels.
Punjab & Sind Bank (PSB)
The smallest of these five PSBs, this bank is known for its high volatility. The government holds a nearly 98% stake.
Vaish believes a float expansion here could bring fresh investor interest. He recommends watching ₹30 for support and ₹35 for resistance.