Moneycontrol Bureau
Banking stocks have fallen like nine pins in the last three months. Slowing loan growth, rising bad loans, declining profits and the depreciating rupee driving the borrowing cost higher are the major issues plaguing the financial sector. Interbank rates also surged to a 17-month high last week after the Reserve Bank of India tightened liquidity.
Bank Nifty, the barometer of banking stocks has fallen nearly 32 percent since May 17. It fell from a high of 13317 on May 17 to close today at 8870. Foreign institutional investors' (FIIs) stake in major private banks is over 30 percent and the severe downfall seen in the rupee will further accentuate selling in these stocks.
Arindam Ghosh, MD&CEO of Blackridge Capital Advisors expects the Bank Nifty to fall another 10 to 12 percent. "The market is going to turn a lot worse before some kind of stability will get restored. The downward pressure on the index seems to be pretty strong at this point in time," he added. Banking sector is a complete no-no for Ridham Desai, managing director at Morgan Stanley. As of now, he feels Indian banks need recapitalisation of USD 20-30 billion and de-rating of those companies may not be over yet.
| Name | 17-May | 27-Aug | % Chg | FII stake |
| Bank Of India | 324.8 | 137.3 | -58 | 13.62% |
| Yes Bank | 542.8 | 235.8 | -57 | 46.03% |
| Union Bank of India | 243.3 | 106.5 | -56 | 11.65% |
| Canara Bank | 440.1 | 202.2 | -54 | 12.70% |
| Punjab National Bank | 834.3 | 459.0 | -45 | 17.99% |
| Axis Bank | 1535.3 | 877.7 | -43 | 40.70% |
| Bank Of Baroda | 740.5 | 459.7 | -38 | 15.34% |
| State Bank of India | 2424.9 | 1520.0 | -37 | 9.79% |
| ICICI Bank | 1230.5 | 802.6 | -35 | 39.22% |
| IndusInd Bank | 511.1 | 345.3 | -32 | 42.28% |
| Kotak Mahindra Bank | 794.4 | 613.6 | -23 | 31.21% |
| HDFC Bank | 718.9 | 561.9 | -22 | 34.49% |
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