Banks stocks got butchered in morning trade Tuesday on the back of the RBI moves to curb the falling rupee. According to the RBI the excess liquidity in the system was one of the reasons for the rupee volatility. The demand for USD has increased because of the improving domestic liquidity scenario, hence the RBI took measures to curb on liquidity.
The central bank restricted banks' borrowing through liquidity adjustment facility (or a window to borrow funds from RBI called LAF) to the tune of 1 percent of total deposits or Rs 75,000 crore. Credit Suisse has downgraded wholesale funded banks like YES Bank, Kotak Mahindra Bank, IndusInd Bank and the non-banking finance companies stating that these banks will be forced to curb asset growth in addition to facing margin pressures. Credit Suisse has downgraded Kotak Mahindra Bank and IndusInd Bank to underperform from neutral and has cut the target price to Rs 618 from Rs 680 and to Rs 416 from Rs 465, respectively. Morgan Stanley says with economic growth refusing to pick up, higher rates will be negative for banks. "Also bank stocks are overowned and could correct due to rise in bond yield. Our top avoids are SBI (down 4.6 percent), PNB (falls 5.7 percent) and Axis Bank (down 4.7 percent)," Morgan Stanley adds.Company Name | Last Price | % Change |
| Allahabad Bank | 88.4 | -3.97 |
| Bank of Baroda | 561.7 | -4.88 |
| Bank of India | 221.75 | -4.11 |
| Canara Bank | 338.4 | -6.29 |
| IDBI Bank | 71.55 | -4.15 |
| PNB | 624.35 | -5.72 |
| SBI | 1823.65 | -4.64 |
| Union Bank | 171.2 | -5.18 |
| Axis Bank | 1247.8 | -4.67 |
| HDFC Bank | 676.4 | -2.74 |
| ICICI Bank | 1004.05 | -5.37 |
| IndusInd Bank | 474.45 | -6.3 |
| Kotak Mahindra | 729.35 | -3.71 |
| Yes Bank | 457.9 | -8.48 |
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