Mid and small-sized private sector banks in demand

Karnataka Bank, Lakshmi Vilas Bank, South Indian Bank, Dhanlaxmi Bank, Development Credit Bank and Karur Vysya Bank are up 8-20% on BSE.

Shares of mid-and-small sized banks such has Karnataka Bank, Lakshmi Vilas Bank, South Indian Bank, Dhanlaxmi Bank, Development Credit Bank and Karur Vysya Bank have rallied up to 20% on back of heavy volumes on the bourses.

At 1045 hours, the Bombay Stock Exchange (BSE) benchmark index was up 0.18%, while banking index was gain less than 1%.

According to media reports, the Reserve Bank of India (RBI) governor Raghuram Rajan has said the central bank will soon come out with new rules for the entry of foreign banks that may even allow them to take over Indian banks.

Currently, foreign banks in India operate as branches of the foreign parent and face restrictions on the number of branches they can set up in the country, the media report suggests.

Meanwhile, most of these banks were underperformed the market by falling more than 30% in past three months in wake of RBI measures.

Lakshmi Vilkas Bank is locked in upper limit of 20% at Rs 77.85 on BSE. A combined 826,036 shares have changed hands on the counter and there are pending buy orders for 157,628 shares on the BSE and NSE.

Karnataka Bank has rallied 17% to Rs 109 on back of heavy volumes on BSE. A combined nearly 15 million shares already changed hands on the counter so far against an average less than 2 million shares that were traded daily in past two weeks on BSE and NSE.

Among the other individual stocks, Dhanlaxmi Bank has surged 11% to Rs 47, followed by South Indian Bank and Development Credit Bank ( up 9% each at Rs 21.65 and Rs 53.40 respectively) and Karur Vysya Bank and City Union Bank ( up 8% each at Rs 352 and Rs 49.25 respectively).