Thai shares ended lower on Tuesday as investors took profits ahead of the Chinese New Year, but buying of bank stocks, bolstered by the cabinet's approval of a bank merger plan, limited the fall.
Sentiment on the banking sector improved after the cabinet approved a plan to merge Thai Military Bank with DBS Thai Danu Bank and Industrial Finance Corp of Thailand to form the country's fifth-biggest bank by assets.
Shares in the three banks were suspended in afternoon trade following the announcement by Finance Minister Suchart Jaovisidha.
But Suchart also said state-owned BankThai PCL would be merged with other Thai banks in a separate deal, sending its shares soaring 19 percent to close at 8.1 baht.
The benchmark Stock Exchange of Thailand (SET) composite index ended down 2.79 points, or 0.36 percent, at 771.88 points and the big-cap SET 50 index fell 0.04 percent to 50.09 points.
Turnover fell to 28 billion baht ($719.2 million) from 31.4 billion baht on Monday.
"Retail investors took profits and most of them stayed on the sidelines as they wanted to reserve cash for spending during the Chinese New Year holidays this week," said analyst Charoen Iampathanatham of IB Securities.
There is no official holiday in Thailand for the Lunar New Year, which falls on January 22, but ethnic Chinese will celebrate it over several days.
Dealers said they expected buying from domestic institutions to lend support over the next few days.
"Institutional buying really helped today and I expect their buying momentum to continue," said Piti Ketsiri, head of equity sales at BT Securities, who expected resistance on Wednesday at 778-785 points and support at 770-767 points.
The banking sector index rose 1.69 percent, with shares in Thailand's largest commercial bank, Bangkok Bank, up 0.98 percent to 103 baht on expectations the bank will report good 2003 earnings after the market close.
Shares in Thailand's largest brokerage, Kim Eng Securities, banned from net settlement trading and margin loans until January 29, fell 8.96 percent to 61 baht.
Shares in top credit card issuer Krung Thai Card fell 5.7 percent to 33 baht on concerns increasing competition might lead to a price war this year.
The property sector index rose 0.53 percent, with shares in Thailand's largest contractor Italian Thai Development up 4.7 percent to 132 baht.