Federal Bank has been the subject of intense activity by operators, and has risen 63% since 30 April 2003.

There's much talk that the bank is a prime candidate for merger or acquisition and this has prompted accumulation by market players.

Today, the scrip was no less the target of buying, rising 4.20% to Rs 154.90 by 10:50 IST. Over 1.17 lakh Federal Bank shares changed hands on BSE till then.

The stock of the private sector bank has now risen 63% from Rs 95 on 30 April 2003.

The market sees Federal Bank as a veritable takeover target. Operators have been keenly pursuing second-rung private banks of late after Bank of Muscat acquired a 26% stake in Centurion Bank for Rs 75 crore. The move set off expectations that large multinational banks may expand base in India through acquisition of private sector banks.

Earlier, the government hiked the foreign direct investment limit in private sector banks, from 49% to 74%. This may have prompted solid interest in Indian private sector banks by MNCs eager to expand.

The banking sector, as it is, is in the limelight following the impressive performance registered by most banks and the bright prospects seen for these. Also, the weak tech sector has prompted investors to shift portfolio to banking stocks.

The Securitisation Act has acted as a major trigger for banking stocks in the form of allowing easy recovery of non-performing assets by banks. The cheap valuation of banking stocks has further brought investor interest in the banking sector.

Last month, Federal Bank announced its fourth quarter as well as full year results ended 31 March 2003. For Q4, Federal Bank earned a 25.5% rise in net profit to Rs 22.55 crore (Rs 17.96 crore) on a 7% increase in total income to Rs 340.21 crore (Rs 317.90 crore). For FY 2002-03, the company recorded a 28.04% increase in net profit to Rs 105.01 crore (Rs 82.01 crore) on a 6.6% climb in total income to Rs 1,345.89 crore (Rs 1,262.81 crore).

As on 31 March 2003, the public and institutions held 58.93% and 29.12% stake in Federal Bank, respectively.