Shares of banks with higher CASA close weak; Punjab National Bank and Axis Bank most hit.
The Reserve Bank of India's credit policy did not go well with the bank stocks on Tuesday. On a day when the benchmark indices gained around two per cent, banks’ stocks emerged as one of the worst performers.
The central bank raised the repo rate, the rate at which it lends to banks, by 25 basis points (one basis point is hundredth part of a percentage point) to 8.5 per cent. Besides, it also de-regulated the savings bank deposit interest rate with immediate effect, thereby allowing the banks to determine their savings interest rate.
| TAKING A HIT SHARE PRICE MOVEMENT AND CASA OF BANKS | |||
| Banks | CASA (%) | Closing price (Rs/share) | Change** (%) |
| PNB | 37.41 | 928.60 | 4.36 |
| Axis Bank | 42.24* | 1119.05 | 4.25 |
| SBI | 45.30 | 1840.45 | 3.52 |
| ICICI Bank | 41.89 | 877.25 | 0.91 |
| HDFC Bank | NA | 468.75 | 3.17 |
| Canara Bank | 25.36 | 441.55 | 0.28 |
| J&K Bank | 40.40 | 816.00 | 0.18 |
| Allahabad Bank | 32.02 | 139.90 | 4.73 |
| IDBI | 19.19* | 106.70 | 3.29 |
| * As on 30 September (Rest is as on 30 June), ** over previous close Source : Capatline/BSE Compiled by BS Research Bureau | |||
According to sector's analysts, the deregulation would hurt banks with higher CASA (low-cost deposits) and benefit those that have low CASA in the long run. Reacting to the policy statements, stocks of the lenders with higher CASA fell the most. Among the Bombay Stock Exchange's sectoral indices, bank index closed 1.2 per cent weak or down 133.02 points to close at 10,919.40.
Shares of Punjab National Bank (PNB), which has a CASA of 37.41 per cent as on 30 June, were the top losers in the index, as the stocks declined 4.36 per cent or Rs 42.3 to close at Rs 928.60. This was followed by Axis Bank, which fell 4.25 per cent as its CASA stood at 42.24 per cent as on 30 September.
Stocks of State Bank of India (SBI) dipped 3.52 per cent, HDFC Bank 3.17 per cent, Bank of India 2.36 per cent and Bank of Baroda 2.3 per cent.
On the other hand, shares of banks with low CASA rallied in the strong market on the Bombay Stock Exchange. YES Bank gained the most with a rally of 8.81 per cent or Rs 24.8 to close at Rs 306.3, followed by Kotak Mahindra Bank, which rose 5.23 per cent or Rs 24.6 to close the trading session at Rs 494.85.
