Shares of Indian Overseas Bank (IOB) came under selling pressure on Wednesday after the government announced plans
The government proposed to sell up to 38.51 crore shares, or 2 per cent of the base offer size, with an option to sell an additional 19.25 crore shares, representing 1 per cent of the total issued and paid-up equity share capital of the bank, IOB said in a regulatory filing.
The issue opened today for institutions and on Thursday for retail investors. At the current market price, the government would be able to garner about ₹2,100 crore by offloading up to 3 per cent stake in the bank.
The stock fell sharply in early trade as the proposed discount triggered concerns over near-term price pressure and potential dilution. Market participants typically react cautiously to OFS announcements, especially when the floor price is set below prevailing market levels, as it often leads to short-term weakness in the counter.
The government’s move is part of its broader strategy to gradually reduce its stake in public sector banks while improving liquidity and widening public shareholding.
Indian Overseas Bank shares had seen a strong run-up in recent months, driven by improved asset quality, better capital position and optimism around PSU banks.
Traders expect volatility in the stock over the next few sessions as the market digests the stake sale and gauges demand for the OFS.
At 1.10 pm, the stock traded at ₹34.70, down 5 per cent, close to the intraday low of ₹34.61 against the previous close of ₹36.57