Low Float PSU Banks like UCO, IOB see gains of up to 9% ahead of RBI policy outcome

The Nifty PSU Bank index is among the top sectoral gainer in Wednesday’s trading session as well, extending its gains from Tuesday, during which the index had gained over 2.5%.

All constituents of the PSU Bank index are trading with gains in Wednesday’s trade.

UCO Bank, Central Bank, Indian Overseas Bank and Punjab & Sind Bank are the top four gainers on the PSU Bank index on Wednesday. While shares of UCO Bank have gained as much as 9%, the other three have seen gains between 6% to 7%.

However, it must be kept in mind that all of these stocks have very little float in the market as the government holds most of the stake. The government holds a 95.39% stake in UCO Bank, 93.08% stake in Central Bank of India, 96.38% stake in Indian Overseas Bank, and a 98.25% stake in Punjab & Sind Bank.

The PSU Bank index had made a high of 8,053 on June 3 this year, before correcting 23% to a low of 6,163, which it had made on November 21 this year. Since then, the index has recoverd 15% from those levels but remains below the June peak.

All eyes are now on the RBI policy outcome on Friday. While most economists believe that there would not be a cut in the repo rate from the Monetary Policy Committee, there are expectations that the RBI might take some measures to ease the liquidity pressure in the system by cutting the Cash Reserve Ratio (CRR) or by carrying out an Open Market Operation (OMO).