Bank stocks surrender early gains as rupee falls to new low

In highly volatile trade, banking stocks today erased almost all the gains they notched up in early trade after the rupee declined sharply to sub-64 levels.

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Banking stocks were trading in the positive terrain on BSE taking cues from RBI measures to ease liquidity in the system.

Yes Bank, which jumped 17 per cent during the day to touch an intra-day high of Rs 284.40, settled with gains of just 5.27 per cent at Rs 255.55 on the BSE.

Bank of India ended the day down 4.06 per cent after surging 7.58 per cent during the day, Canara Bank settled at Rs 206.85, down 4.68 per cent. It had surged 14 per cent during the day.

Axis Bank ended the day with 0.29 per cent loss and for Kotak Mahindra Bank it was 1.51 per cent. These stocks surged over 8 per cent and 6 per cent respectively in early trade.

PNB was quoted at Rs 479.40, up 0.27 per cent, and HDFC Bank was at Rs 593.65 higher by 1.61 per cent, while ICICI Bank was down 0.11 per cent and SBI (0.25 per cent).

"As the rupee stumbles to new lows on a seeming day-to- day basis, there are two major concerns on the immediate horizon. Firstly, the market is losing its confidence in the RBI's ability to prop up the rupee, and secondly the sudden decline in Rupee is causing a scare among firms nationwide," broking firm RKSV Cofounder, Raghu Kumar said.

The Reserve Bank, yesterday said it will conduct open market purchase of government bonds of Rs 8,000 crore on August 23 to inject liquidity, following which the bank shares witnessed an uptrend in the morning.

Experts however said these measures are not enough and the weakness in the rupee is likely to continue.

The rupee tumbled to an all-time low of 64.45 against the dollar in late afternoon trade. Later it ended at Rs 64.11, lower by 86 paise compared to its last close.