Scarcity-Induced Boom

Scarcity-Induced Boom Nishtar ENCOURAGING corporate news, return flow of large funds released from the recent new issues which were heavily oversubscribed, paucity of good scrips and fairly large institutional support for select counters have led to an all-round impressive rise in equity prices. And surprisingly enough, it is the slow-moving bank shares which have scored the most spectacular gains. Within a week, Bank of India rose from Rs 94 to Rs 121, Baroda from Rs 83 to Rs 103, Central from Rs 57 to Rs 75 and United Commercial from Rs 92 to Rs 115. Never before have bank shares been known to have recorded such a steep rise in so short a time. The spurt was due as much, if not more, to scarcity of offerings as to fresh support induced mainly by the proposal of Central Bank of India Ltd to merge itself with Tata Engineering and Locomotive Company; it was felt that the other residual banking companies would follow the Central's lead. One wonders whether the buying in bank shares was based on any thoughtful assessment of the possible benefits in the event of a merger. And one cannot take it for granted that the schemes of amalgamation, which might have to be referred to the Monopolies Commission, would be cleared by the Commission.