Banking shares fell for the third successive day today on sustained selling after worries that rising lending rates would affect demand for loans, while a sharp increase in deposit rates would squeeze margins, dragging the sectoral index down by over 2 per cent.
Reflecting the weak trend, the 14-share BSE Bankex ended 270.51 points, or 2.03 per cent, down at 13,068.92 with 13 of its components declining.
The BSE benchmark Sensex ended 238.16 points, or 1.19 per cent, down at 19,696.48 points after touching an intra-session low of 19,611.35 points.
The largest state-run lender, State Bank of India, which raised deposit rates by 150 basis points yesterday, fell sharply by 2.01 per cent to Rs 2,807.80.
Among private lenders, stocks of Axis Bank suffered the most by declining 5.57 per cent to Rs 1,251.05, ICICI Bank shed 0.39 per cent to Rs 1,106 and HDFC Bank fell 3.07 per cent to Rs 2,280.15.
"Apart from some nervous selling as rising rates would put pressure on banks' earning, profit-booking by speculators after recent gains also weighed on banking sector stocks," said Deepak Pahwa, a leading Delhi-based stock broker.
Among other major losers, Bank of India fell by 0.60 per cent to Rs 438, Canara Bank by 4.68 per cent to Rs 664.90, Punjab National Bank by 1.16 per cent to Rs 1,181.90, Bank of Baroda by 1.05 per cent to Rs 892.10, Federal Bank by 1.77 per cent to Rs 429.85, Yes Bank by 2.67 per cent to Rs 301.25, Indusind Bank by 3.33 per cent to Rs 277.30.
Bucking the trend, Kotak Mahindra Bank ended 0.22 per cent higher at Rs 465.70.
