Banking shares came under selling pressure on Tuesday, dragging the Bank Nifty index lower for the seventh time in nine sessions since April 23, as investors turned cautious ahead of the US Federal Reserve's key interest rate decision due on Wednesday.
The Bank Nifty slipped over 600 points to move below the 55,000 mark at 54,271.40. 11 of the 12 constituents of the index settled in the red, reflecting broad-based weakness across both public and private sector lenders.
Bank of Baroda was the top loser in the pack, settling 10.91 percent lower at Rs 221.95 per share on the NSE after the PSU lender reported 7 percent drop in net interest income (NII) and a rise in provisions. Canara Bank followed closely, closing 5.22 percent lower at Rs 92.09 apiece.
Punjab National Bank fell as much as 4.93 percent to settle at Rs 94.50 on the NSE. IndusInd Bank dropped 2.64 percent, while Canara Bank declined 2.24 percent.
Selling pressure also extended to heavyweight names like State Bank of India and Kotak Mahindra Bank, which declined between 0.60 percent and 2.08 percent. Analysts attributed the fall to weaker-than-expected quarterly earnings and broader uncertainty in the market.
Kotak Mahindra Bank on Saturday reported a 7.57 percent drop in consolidated net profit to Rs 4,933 crore for the March quarter of FY25, hit by rising stress in its microlending portfolio. Similarly, State Bank of India saw its net profit slip 8.34 percent year-on-year to Rs 19,600 crore for the January-March quarter, largely due to a decline in net interest margins.
Though SBI reported a 2.69 per cent rise in core net interest income to Rs 42,775 crore, its net interest margin dropped by 32 basis points year-on-year to 3.15 per cent, despite loan growth of over 12 per cent.
Private sector majors HDFC Bank and ICICI Bank also traded lower in Tuesday's trade.
Investor sentiment was further weighed down by uncertainty around the JSW-Bhushan Steel deal and global cues. Market participants are awaiting cues from the US Fed's policy stance, which will be crucial in shaping near-term direction for equities, especially rate-sensitive sectors like banking.
"Globally, US markets ended slightly lower due to profit-booking after a nine-day rally. Concerns over US-China trade negotiations and the upcoming Federal Reserve decision are keeping investors on edge," said Vikas Jain, Head of Research at Reliance Securities.
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