Is it true that Rakesh Jhunjhunwala has picked up a stake in Canara Bank? Do you suggest buying into the stock for a trade?

Rakesh Jhunjhunwala has picked up a 1.59% stake in Canara Bank valued at Rs.431 crore as part of the qualified institutional placement or QIP done by Canara Bank last week. Jhunjhunwala picked up 2.885 crore shares of Canara Bank constituting 1.59% of the paid-up outstanding capital of Canara bank. It may be recollected that the QIP had been open from 17-Aug to 23-Aug.

As per the allocation sheet shared by Canara Bank, the bank has allotted a total of 16.74 crore equity shares to eligible QIPs, which means Rakesh Jhunjhunwala has picked up more than 17% of the QIP amount. The QIP was done at an issue price of Rs.149.35 aggregating Rs.2,500 crore. Apart from Rakesh, the other key subscribers were LIC, Morgan Stanley, Volrado, BNP, SocGen and ICICI Pru Life.

Frankly, I would not suggest you to buy the stock just because Mr. Jhunjhunwala has bought it because he has a different investment perspective and his capacity to wait and take losses will be much higher. While PSU banks do make a case for investing since the worst is over, you must ideally consult with your financial advisor and ensure that it fits into your long term goals.