Shares of banking stocks such as Kotak Mahindra Bank, IndusInd Bank, Punjab National Bank (PNB), and Bank of Baroda traded mildly in green on November 20, a session after most of them splurged in the negative territory due to the Reserve Bank of India's (RBI's) tightening of unsecured retail lending.
SBI Cards - the stock that was most hit on November 17 (down 5 percent) recouped some of its losses to gain over a percent on November 20. Some respite for SBI Cards came after global brokerage firm Morgan Stanley assured investors that the impact of RBI's new risk-weight measures would not constrain their Tier-1 capital ratio as much as feared.
"The impact of cost of funds should be manageable for SBI Cards. We see lower risk for SBI Cards due to slower unsecured credit growth than others. The growth of receivables is lower than the industry average and its own history," affirmed Morgan Stanley, sharing an 'overweight' rating on the counter, with a target price of Rs 950 per share.
However, CLSA, in an earlier note, cautioned SBI Cards to face the biggest impact of credit slowdown due to its mono-line stream. Analysts estimated over 400 basis points (bps) impact on their Tier-1 CET ratio to 17 percent from current Tier-1 ratio of 21 percent. CLSA shared an 'underperform' call on the counter.
That apart, non-banking financial corporation (NBFC) major Bajaj Finance shares extended its losing streak on November 20. Bajaj Finance stock declined three percent in the past two sessions. Not only did the lender face the brunt of RBI's new risk-weight measures, but also was bogged down due to their temporary suspension of new EMI cards.
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Analysts at BofA Securities expect Bajaj Finance's fee-income to be impacted in the near-term due to this ban. However, they retained a 'buy' call on the counter with a target price of Rs 8,845 per share after the company confirmed that it would not impact their customer acquisition regime.
Overall, Bank Nifty ended flat at 43,584 as against flat moves of Nifty50 at 19,694 levels on November 20.
Bearish sentiment was seen across State Bank of India (SBI), ICICI Bank, HDFC Bank, Axis Bank, Bandhan Bank, IDFC First Bank, and Federal Bank stocks as they slipped up to 1 percent on November 20.
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Individually, Bandhan Bank shares were the worst hit (down over 1 percent) on November 20 as the stock is set to exit from S&P BSE 100 index effective December 18.
IDFC First Bank, too, was one of the major laggard in trade as the bank's exposure to personal loans and credit cards was among the highest. The bank's exposure to personal loans stand at 19 percent, while NBFC loans were at 24 percent, showed a Jefferies report.
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