The shares of government owned banking shares plunged in trade, following a merger announced by the Government of India on Friday, after market hours.
Shares of Punjab National Bank was the worst hit, with the shares dropping a huge 6.63 per cent in trade. Other stocks that fell were Union Bank of India, down 5 per cent and Canara Bank down 5 per cent. Even Indian Bank was down close to 6 per cent, following the government's decision to merge some of the banks.
All of the above were the anchor banks. Even the non anchor banks that have been merged into the above mentioned banks fell. Andhra Bank, Allahabad Bank and Oriental Bank of Commerce fell. However, United Bank of India gained ground, following its merger with the more stronger set of bank like Punjab National Bank.
It maybe recalled that the Finance minister, announced a scheme of merger for various government owned banks. According to the scheme of merger the banks that are likely to amalgamate include: 1) Punjab National Bank+ Oriental Bank of Commerce+United Bank 2) Canara Bank+Syndicate Bank 3) Union Bank of India+Andhra Bank + Corporation Bank and Indian Bank with Allahabad Bank.
It is unlikely that we will see too much pressure on government owned banking stocks, as many of them have crashed to 52-week lows.