Banks stocks on crash course

STOCK REPORT

Key indices ended nearly 3 per cent down on Monday on panic selling by foreign funds and retail investors after Reserve Bank of India on late Friday announced a 50 bps hike in bank cash reserve ratio to 5.5 per cent. The hike will come into effect in two stages .

On Friday, indices fell 1 per cent on profit booking, snapping a seven-day winning streak.

On Monday, Bombay Stock Exchange Sensex ended at 13399.43, down 400.06 points or 2.9 per cent from Friday. It was Sensex's highest intraday decline since Jun 13. Intraday, it fluctuated between 13261.73 and 13801.98.

The National Stock Exchange Nifty ended at 3849.50, down 112.50 points or 2.8 per cent. Nifty saw its biggest intraday decline since July 17.

Intraday, it fluctuated between 3798.30 and 3965.05. Turnover on both the exchanges together was roughly Rs 14,200 crore, up 21 per cent from Friday.

On Monday, bank shares declined sharply, as RBI's CRR move will drain out an estimated Rs 13,500 crore from the banking system, dealers said.

The BSE Bank Index, down 6.4 per cent, was the worst affected among BSE indices. Punjab National Bank ended down 8.4 per cent at Rs 508, and State Bank of India was down 8 per cent at Rs 508.

Banks' net interest income is seen falling Rs 650-1,000 crore due to the hike, analysts said.

ICICI Bank ended down 7 per cent at Rs 821, despite its announcement on Saturday that it will acquire Sangli Bank.

The merger will not have any material impact on ICICI Bank's financial profile, according to credit rating company Standard and Poor's.

Tata Steel ended down 7 per cent at Rs 821 after Brazil's CSN made 515 pence per share offer for Anglo-Dutch steel maker Corus Group Plc, trumping a raised bid from Tata Steel by 3 per cent, made less than 12 hours earlier.