India may be forced to delay selling its stake in Axis Bank Ltd because of a weak stock market, The Economic Times newspaper reported on Saturday, citing unnamed market sources and an investment banker aware of the development.
India was planning to raise Rs 70 billion ($950 million) by selling 4 per cent of its stake in Axis Bank by early November, the newspaper reported, adding that a delay would be a setback for the government in meeting its divestment target for the year.
The government holds a 9.6 per cent stake in Axis Bank through state-owned entity Specified Undertaking of Unit Trust of India (SUUTI).
Axis Bank, India's third-biggest private sector lender, did not immediately respond to an email seeking comment. A spokesman at India's finance ministry could not immediately be reached.
Since the beginning of the year the rupee has fallen by 14 per cent, while the price of crude oil has risen by 37.4 per cent sending India's stock market into a tailspin.
The situation has been exacerbated by a series of defaults at ailing shadow banking firm Infrastructure Leasing & Financial Services (IL&FS) which has undermined confidence in India's financial sector and triggered declines in the nation's stock and bond markets.
India's National Stock Exchange (NSE) index fell 5.62 per cent this week, while the Bombay Stock Exchange (BSE) index shed 5.11 per cent, their sharpest drop since the week ending Feb. 12, 2016.