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Karur Vysya, DCB Bank Shares Gain After HDFC AMC Gets RBI Nod To Buy Stake

HDFC Asset Management Co. received RBI's approval to increase its shareholding in the banks to up to 9.5%.

<div class="paragraphs"><p>If HDFC AMC's aggregate holding in Karur Vysya falls below 5%, prior approval of the RBI is required to increase stake. (Photo: Unsplash)</p></div>
If HDFC AMC's aggregate holding in Karur Vysya falls below 5%, prior approval of the RBI is required to increase stake. (Photo: Unsplash)

Shares of four private sector banks gained on Thursday after HDFC Asset Management Co. got the Reserve Bank of India's approval to increase its stake in these banks to up to 9.5%.

The private lenders are DCB Bank Ltd., Karur Vysya Bank Ltd., Federal Bank Ltd. and Equitas Small Finance Bank Ltd.

HDFC AMC must ensure that its aggregate holding in these banks doesn’t exceed 9.5% of the paid-up share capital at all times, according to an exchange filing by each of these banks. Further, if the aggregate holding falls below 5%, prior approval of the Reserve Bank of India will be required to increase it to 5% or more.

The central bank has also advised HDFC AMC to increase its stake in these banks by up to 9.5% within a period of one year from the date of approval. If the AMC fails to acquire a major shareholding within the stipulated period, the approval granted by the RBI will be cancelled.

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Shares of DCB Bank rose as much as 4.72%, the most since Aug. 21, before paring gains to trade 2.66% higher as of 10:10 a.m. This compares to a 0.72% decline in the NSE Nifty 50.

It has risen 0.55% on a year-to-date basis. Total traded volume so far in the day stood at 15 times its 30-day average. The relative strength index was at 69.

Of the 21 analysts tracking the company, 18 maintain a 'buy' rating, two recommend a 'hold,' and one suggests a 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 15.6%

Shares of the Karur Vysya Bank rose as much as 2.77%, the most since Sept. 18, before paring gains to trade 0.90% higher at 10:10 a.m. This compares to a 0.72% decline in the NSE Nifty 50.

It has risen 19.21% on a year-to-date basis. The relative strength index was at 66.6.

All 12 analysts tracking the company maintain a 'buy' rating, according to Bloomberg data. The average 12-month consensus price target implies an upside of 20.1%.

Shares of Equitas Small Finance Bank rose as much as 4.05% intraday to Rs 87.25, the most since Sept. 8, before paring gains to trade 1.85% lower at Rs 85.4 apiece, as of 11:42 a.m. This compares to a 0.75% decline in the NSE Nifty 50.

It has risen 46.36% on a year-to-date basis. Total traded volume so far in the day stood at 1.2 times its 30-day average. The relative strength index was at 47.5.

Out of the 19 analysts tracking the company, 17 maintain a 'buy' rating and two recommend a 'hold', according to Bloomberg data. The average 12-month consensus price target implies an upside of 26.5%.

Shares of Federal Bank rose as much as 1.54% intraday to Rs 148.75, before paring gains to trade 1.19% lower at Rs 148.25 apiece, as of 11:39 a.m. This compares to a 0.71% decline in the NSE Nifty 50.

It has risen 6.47% on a year-to-date basis. The relative strength index was at 61.8.

Out of the 39 analysts tracking the company, 36 maintain a 'buy' rating and three recommend a 'hold', according to Bloomberg data. The average 12-month consensus price target implies an upside of 10.7%.

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