 "Nifty PSU Bank index records steepest weekly fall since July 2009")
Shares of public sector banks (PSBs) witnessed a sharp sell-off with the Nifty PSU Bank index recording its steepest weekly fall since July 2009.
Nifty PSU Bank index today declined 5.8% and fell 12.9% this week on the National Stock Exchange (NSE) on concerns of asset quality pressures. Earlier, on week ended July 12, 2009, the index had tanked 13.4% in single week.
IDBI Bank, Oriental Bank of Commerce, Allahabad Bank, Union Bank of India and Jammu & Kashmir Bank slipped more than 15% each, while Syndicate Bank, UCO Bank, Bank of India, Andhra Bank, Indian Bank, Punjab National Bank and State Bank of India (SBI) down between 12%-15% during the week. Most of the stocks are trading multi-months low.
Since January 1, 2016, Nifty PSU Bank index plunged 20.5%, while Nifty Bank index slipped 10.8% as compared to 6.5% fall recorded by the Nifty 50 index.
According to broking firm K R Choksey Shares and Securities, the October-December (Q3FY16) should mark as one of the toughest quarters particularly for PSU banks in light of continued surmounting asset quality pressures.
“With Regulator insisting on expedition of balance sheet clean-up sooner than later, steep base rate cuts, flat G-sec yields and moderate economic recovery should keep the banks on their toes,” the broking firm said in a Q3 results preview.
PSU banks’ earnings are expected to be impacted by regulatory actions to clean banks’ balance sheet, largely flat G-Sec yields, moderate macro recovery putting pressure on loan growth and net interest margins or NIMs (impacted by 0-35bp base rate cut). Fee income is also expected to remain under pressure (led by weak corporate demand), according to Motilal Oswal Securities said in a report.
Nifty PSU Bank index today declined 5.8% and fell 12.9% this week on the National Stock Exchange (NSE) on concerns of asset quality pressures. Earlier, on week ended July 12, 2009, the index had tanked 13.4% in single week.
IDBI Bank, Oriental Bank of Commerce, Allahabad Bank, Union Bank of India and Jammu & Kashmir Bank slipped more than 15% each, while Syndicate Bank, UCO Bank, Bank of India, Andhra Bank, Indian Bank, Punjab National Bank and State Bank of India (SBI) down between 12%-15% during the week. Most of the stocks are trading multi-months low.
Since January 1, 2016, Nifty PSU Bank index plunged 20.5%, while Nifty Bank index slipped 10.8% as compared to 6.5% fall recorded by the Nifty 50 index.
| Week | Weekly fall in % | ||
| ended | Nifty 50 | Nifty Bank | Nifty PSU Bank |
| 12/07/2009 | -9.5 | -13.8 | -13.4 |
| 15/01/2016 | -2.2 | -5.8 | -12.6 |
| 13/07/2014 | -3.8 | -7.1 | -11.9 |
| 12/12/2010 | -2.3 | -7.3 | -10.0 |
| 29/07/2012 | -2.0 | -3.3 | -9.7 |
| Top 5 Nifty PSU Bank index weekly fall since July 2009 | |||
| Source: Bloomberg | |||
According to broking firm K R Choksey Shares and Securities, the October-December (Q3FY16) should mark as one of the toughest quarters particularly for PSU banks in light of continued surmounting asset quality pressures.
“With Regulator insisting on expedition of balance sheet clean-up sooner than later, steep base rate cuts, flat G-sec yields and moderate economic recovery should keep the banks on their toes,” the broking firm said in a Q3 results preview.
PSU banks’ earnings are expected to be impacted by regulatory actions to clean banks’ balance sheet, largely flat G-Sec yields, moderate macro recovery putting pressure on loan growth and net interest margins or NIMs (impacted by 0-35bp base rate cut). Fee income is also expected to remain under pressure (led by weak corporate demand), according to Motilal Oswal Securities said in a report.
| Bank | 08 Jan,2016 | 15 Jan,2016 | % chg |
| IDBI Bank | 78.05 | 60.80 | -22.10 |
| Oriental Bank | 127.75 | 104.10 | -18.51 |
| Allahabad Bank | 64.65 | 52.90 | -18.17 |
| Union Bank (I) | 136.85 | 113.30 | -17.21 |
| J&K Bank | 83.70 | 69.80 | -16.61 |
| Syndicate Bank | 81.90 | 70.10 | -14.41 |
| UCO Bank | 42.65 | 36.65 | -14.07 |
| Bank of India | 109.90 | 94.55 | -13.97 |
| Andhra Bank | 60.85 | 52.60 | -13.56 |
| Indian Bank | 107.55 | 93.85 | -12.74 |
| Punjab Natl.Bank | 105.10 | 92.20 | -12.27 |
| SBI | 208.95 | 184.30 | -11.80 |
| Canara Bank | 219.70 | 195.20 | -11.15 |
| IOB | 29.70 | 26.55 | -10.61 |
| Bank of Baroda | 140.45 | 126.15 | -10.18 |
| Price on NSE in Rs | |||
