Canara Bank , a prominent public sector lender, has seen its shares reach a new 52-week high of Rs 141.45, marking a significant 10% increase over three consecutive trading sessions. This rally comes on the heels of the bank's impressive quarterly results and potential regulatory changes that could boost foreign investment in public sector banks.

Strong Q1 FY24 Performance

Canara Bank has reported robust financial results for the first quarter of the fiscal year 2024:

Improved Asset Quality

The bank has shown significant improvement in its asset quality:

Potential Regulatory Changes

Adding to the positive sentiment, there is speculation about a potential increase in foreign ownership limits for public sector banks:

• Current limit: 20%
• Proposed limit: 49%
• Estimated passive inflows: $4 billion across PSU banks
• Potential inflow for Canara Bank: $305 million (as per Nuvama Institutional Equities)

This proposed change, if implemented, could significantly boost foreign investment in Canara Bank and other public sector banks, potentially leading to increased liquidity and investor interest.

The combination of strong financial performance and the possibility of increased foreign investment has contributed to the recent surge in Canara Bank's stock price. Investors and market watchers will likely keep a close eye on both the bank's continued performance and any developments regarding the foreign ownership regulations in the coming months.

Renowned investor Rekha Jhunjhunwala has significantly increased her holdings in three major Indian companies during the second quarter, reflecting growing investor confidence in the banking and retail sectors.

Increased Stakes

Rekha Jhunjhunwala made the following notable purchases:

Canara Bank's Strong Performance

The increased stake in Canara Bank comes on the heels of the bank's robust Q2 results:

• Standalone net profit grew by 18.7% year-on-year to Rs 4,773.96 crore
• Operating profit increased by 12.2% to Rs 8,588.00 crore

Market Sentiment and Analyst View

The purchases align with positive market sentiment for PSU banks, driven by potential increases in FII investment caps from 20% to 49%. This change could unlock approximately $4.00 billion in passive inflows for the sector.

InCred Equities has raised Canara Bank's target price to Rs 147.00 from Rs 127.00, maintaining an 'Add' rating on the stock.

Stock Performance

Canara Bank's shares have shown impressive growth:

• 40% gain over the past six months
• 700% increase over five years

Key Financial Metrics

According to the latest financial results released by Canara Bank for Q2:

Asset Quality Improvement

The bank has shown significant improvement in its asset quality:

• Gross NPA ratio: 2.35% (down by 138 basis points)
• Net NPA ratio: 0.54% (down by 45 basis points)
• Provision Coverage Ratio (PCR): 93.50% (up by 270 basis points)

Rekha Jhunjhunwala's increased investments in these companies, particularly in the banking sector, may signal her confidence in the ongoing reforms and growth potential of Indian financial institutions. As the market continues to evolve, investors will be watching closely to see if these strategic moves pay off in the long term.