Shares of State Bank of India (SBI) today plummeted by over 7% on the bourses, amid concerns over a rise in the lender's non-performing assets (NPAs) and a rating downgrade of the entire Indian banking sector by Moody's.
The country's largest PSU bank today reported its second-quarter results, wherein it disclosed a rise in NPAs and also fell short of the market expectations for its overall financial performance.
Besides, global rating agency Moody's today downgraded its outlook on the Indian banking system to "negative", from "stable" earlier.
Selling pressure was significant in the stocks of other financial sector companies as well.
ICICI Bank settled with a loss of 2.16%, HDFC Bank lost 1.50%, IDBI Bank fell by 3.19% and Union Bank ended 2.10% lower.
The BSE banking index also dropped by 2.62%.
The shares of SBI opened on a positive note this morning, but slipped into the red after the announcement of its quarterly results and the news of the Moody's rating action.
The stock settled 7.2% down at Rs 1,853.40 at the NSE, while it closed 6.76% lower at Rs 1,862.50 at the BSE.
In the process, the company's market value dipped by over Rs 8,500 crore to Rs 1,18,268 crore.
Decline in the SBI stock was a major contributor in today's fall of 207.43 points in the market benchmark Sensex.
Analysts said that the shares of SBI fell mainly on concerns of rise in NPAs, as its bad loans have risen considerably in export-oriented units and metal industry.
"SBI reporting higher than expected NPA and Moody downgrade of Indian banking system to negative were enough to create capitulation in the shares for the day," Inventure Growth and Securities Head Research Milan Bavishi said.
Moody's today downgraded the outlook of the Indian banking system on concerns related to economic slowdown, which is affecting asset quality, capitalisation and profitability of the banks.
With a 48.60% jump in net profit to Rs 3,470.43 crore for the Jul-Sep quarter, its gross NPA increased to 4.19% of total assets at the end of September, from 3.38% a year ago.