The stake sale by the government in IDBI Bank to Canada-based Fairfax Financial Holdings Ltd will not have an impact on the stocks of public sector enterprises, especially the public sector banks (PSBs), suggest analysts. The deal price of Rs 81 per share, some said, is far lower than what the markets expected.
The markets, according to Ambareesh Baliga, expected the sale price between Rs 100 and Rs 110 apiece, which is closer where IDBI Bank quoted pre-West Asia war levels earlier in 2026. The counter is down nearly 22 per cent since then (till October 14).

“The stock quoted at Rs 116 a piece in February before West Asia war broke out. So to that effect, the Rs 81 per share price is a disappointment for the markets. IDBI Bank stock will adjust to the reality of the deal price soon,” he said. It had hit a high of Rs 93.60 before settling a tad lower.
On Wednesday, October 14, the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the sale of a 60.72 per cent stake in IDBI Bank to Canada-based Fairfax Financial Holdings Ltd for Rs 52,878 crore post market hours.

The process will see the government sell 30.48 per cent of its stake in IDBI Bank, while Life Insurance Corporation of India (LIC) will divest 30.24 per cent of its shareholding. This will leave the government and LIC with residual stake 15 per cent and 19 per cent, respectively.
The transaction, once completed, will be the largest foreign direct investment (FDI) in India’s financial sector. At the bourses, meanwhile, IDBI Bank stock has been an underperformer and has slipped 13.4 per cent year-till-date (YTD) till October 14 as compared to the NSE 500 index that lost 7.8 per cent during this period, NSE data shows.

On the BSE, stocks such as Rail Vikas Nigam Ltd (RVNL), Gujarat Energy, Ircon International, NBCC (India), Indian Railway Finance Corporation, Hindustan Petroleum Corporation (HPCL) and Rashtriya Chemicals and Fertilizers have slipped up to 45 per cent YTD as compared to 14 per cent dip in the BSE Sensex.
PSU banks such as Bank of Baroda (BoB), Canara Bank, UCO Bank, Central Bank of India and State Bank of India (SBI) have slipped up to 19 per cent YTD during this period, ACE Equity data shows. The BSE PSU Bank index has lost 3.3 per cent, data shows.

While the price comes as a surprise, said G Chokkalingam, founder and head of research at Equinomics Research, the road ahead for PSU bank stocks is not smooth. Stiff inflation and a possible rise in interest rates, he believes, will continue to dent the financial performance in the months ahead.
Inflation, high bond yields and rising interest rates are likely to play spoilsport as far as PSU bank stocks are concerned. The second and the third quarter of 2026-27 (Q2-FY27 & Q3-FY27) will be a challenging period for these banks as the overall profitability is likely to remain under stress,” Chokkalingam added.