Bank Nifty hits three-month low; dips nearly 9% in March

Of the 41 listed banks, the market price of 17 banks has already touched a six-month low

Banking shares continued to remain under pressure on Thursday, with the Bank Nifty hitting a three-month low in intra-day deals. The banking index hit an intra-day low of 17,729, its lowest level since December 2014, before ending the day 2.6 per cent, or 478 points, lower at 17,832 compared with a 2.2 per cent decline in the CNX Nifty. It has corrected 9.4 per cent, or 1,859 points, from 19,691 on February 28, against 6.3 per cent fall in the benchmark index.

Among individual stocks, Punjab National Bank (PNB), Axis Bank and State Bank of India (SBI) were down three per cent each, while Bank of India, Federal Bank, HDFC Bank, Bank of Baroda, ICICI Bank, Canara Bank and IndusInd Bank slipped one to two per cent on the National Stock Exchange.

Bank of India, Dena Bank, Dhanlaxmi Bank, Indian Overseas Bank, Jammu & Kashmir Bank and UCO Bank hit their respective 52-week lows on Thursday.

Analysts say the pain in the overall markets comes from the banking sector, and public sector banks are the larger culprits here. There has been a change in the provisioning norms. As a result, they will have to provision for more (bad debts). This is likely to impact their quarterly performance. Since they also hold a large amount of the G-Sec (government securities) portfolio, if the bond yields remain elevated, it might not benefit public sector banks despite the fall in interest rates.

Deven Choksey, managing director and CEO of K R Choksey Securities, says: “The fall got accentuated on Thursday as many foreign funds that have large exposure to India against the underlying benchmark are paring their exposure. As a result, the axe has fallen on the banking sector given their large exposure to this sector. So, irrespective of the bank, they are just unwinding their position. The overall selling in the market is also partly due to the geopolitical tension in West Asia, and the crude oil has jumped back again to $51-52 levels. So all these issues combined are impacting the sentiment.”

Vaibhav Agrawal, vice-president (research - banking) at Angel Broking, also feels of late, there have been concerns regarding the non-performing assets of banks and the restructuring of assets, taking a toll on the stock performance.

“Another cause for concern impacting sentiment is inflation might go up a little bit in the near term, which can delay the rate cut by the Reserve Bank of India. I see this fall as an opportunity to buy banking stocks for someone who has a 12-18 month perspective. We like Axis Bank, YES Bank, ICICI Bank, SBI, PNB, Bank of Baroda, Bank of India and Canara Bank,” he says.