PSU bank stocks fell up to 7 per cent on profit-booking a day after the government said it will infuse Rs 88,139 crore capital in 20 public sector banks before March 31.
Shares of Punjab National Bank tanked 7.07 per cent, Syndicate Bank 6.92 per cent, Bank of Baroda 6.09 per cent, SBI 4.96 per cent and Oriental Bank of Commerce 4.83 per cent on BSE.
SBI was the worst hit among the 30-Sensex constituents.
Allahabad Bank fell 3.76 per cent, Bank of Maharashtra 2.36 per cent, Bank of India 2 per cent, United Bank of India 1.11 per cent, Central Bank of India 1 per cent, Indian Overseas Bank 0.85 per cent and Dena Bank 0.19 per cent.
"With the bulk of recapitalisation funds going to the banks in the PCA category, PSB heavy weights quickly let go off the recent gains, putting pressure on market sentiment," said Anand James, Chief Market Strategist, Geojit Financial Services Ltd.
The government yesterday said it will infuse an unprecedented Rs 88,139 crore capital in 20 public sector banks (PSBs) before March 31 to boost lending and revive growth. It unveiled steps to tackle the bad loan problem which has reached record levels.
The lenders, which include State Bank of India, account for more than two-thirds of India's banking assets as well as most of the over Rs 8 lakh crore of non-performing assets (NPAs) or bad loans.
The capital infusion is part of the massive Rs 2.11 lakh crore bank recapitalisation plan announced by the government in October last year. It is spread over two financial years -- 2017-18 and 2018-19.
The finance ministry will raise Rs 80,000 crore through recapitalisation bonds, and provide another Rs 8,139 crore from the Budget to recapitalise banks.
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