Bank of India (down 6.69%), Canara Bank (down 4.56%), Union Bank of India (down 6.44%), IndusInd Bank (down 4.09%), HDFC Bank (down 3.69%), Punjab National Bank (down 4.5%), Yes Bank (down 3.21%), Federal Bank (down 2.17%), Bank of Baroda (down 5.82%), IDBI Bank (down 2.54%), ICICI Bank (down 3.76%), Axis Bank (down 3.45%), Kotak Mahindra Bank (down 2.58%) and State Bank of India (down 1.6%) edged lower.
The S&P BSE Bankex was down 3.46% at 13,086.57. It underperformed the S&P BSE Sensex, which was down 2.44% at 18,775.81.
The S&P BSE Bankex underperformed the market over the past one month till 19 June 2013, falling 10.91% compared with the Sensex's 5.13% fall. The index, however, had outperformed the market in past one quarter, rising 2.62% as against Sensex's 1.25% rise.
A setback was witnessed across the financial markets as the rupee hit record low against the dollar and yields on government bonds surged. The rupee was currently trading at 59.77, sharply weaker that Wednesday's close of 58.71/72. The Reserve Bank of India (RBI) on Monday, 17 June 2013, refrained from cutting its key policy rate further despite sluggish economic growth due to the recent steep slide in rupee against the dollar. The central bank after a monetary policy review said that the weakness in rupee could adversely impact inflation which has been slowing in the past few months. A weak rupee makes the cost of oil and other imported goods higher in rupee terms, adding to inflationary pressure.
The yields on government bonds rose sharply after trading resumed after a halt triggered by a breach in an indicative daily band. The daily cap on yield fluctuations was lifted for today by the Fixed Income Money Market and Derivatives Association of India, which sets the limit. The yield on the most traded paper -- 8.33% GS 2026 -- was up almost 12 basis points at 7.5648 per cent from Wednesday's close of 7.4458 per cent. Lower bond prices will result in diminution in value of bond holdings by banks. Bond yields and bond prices are inversely related.
The Reserve Bank of India (RBI) had kept its key policy rate viz. the repo rate unchanged at 7.25% after mid-quarter review of the monetary policy on Monday, 17 June 2013. The central bank also kept the cash reserve ratio (CRR) of scheduled banks unchanged at 4%.
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