Banking Share Under Pressure

Banking shares under pressure ahead of RBI policy

Banking shares are under pressure falling by up to 6% on the bourses ahead of the Reserve Bank of India (RBI) third- quarter review of monetary policy for 2013-14 tomorrow. The expectations on the street are mixed about the stance of the policy. This is because earlier this week the report of the expert committee to revise and strengthen the monetary policy framework was very hawkish, according to the Business Standard reports. The RBI kept its main lending rate viz. the repo rate unchanged after its last policy review in December and said at that time that it expected inflation to ease in the following months. YES Bank, ICICI Bank, Bank of Baroda, Bank of India, IndusInd Bank, Canara Bank and Punjab National Bank are down in the range of 4-6%, while HDFC Bank, Kotak Mahindra Bank and Axis Bank are trading lower by 3% each on the National Stock Exchange (NSE). The NSE banking share index Bank Nifty, the second largest loser among sectoral indices, down 3.4% compared to 1.65% fall in benchmark CNX Nifty at 1150 hours. CNX Nifty has tanked nearly 400 points in intra-day trades, touched a low of 10,596 points against its Friday’s close of 10,982. Among the individual stocks, YES Bank is the largest losers; tanked 6% at Rs 328, followed by Dhanlaxmi Bank, IndusInd Bank and Uco Bank are down 5% each on the NSE.

Rupee off lows; RBI policy eyed The rupee depreciated in morning trade due to month end dollar demand from importers coupled with bearish equities. However, it was off lows recorded in early trade. At 11:30 am, the rupee was trading at Rs 62.72 compared with previous close of Rs 62.69 on Friday. The rupee recovered from the near 63 level seen in early trade as banks sold dollars. According to currency dealers, the RBI may have intervened to pull back the rupee off lows. Dealers, however, see the weak bias continuing for the rupee during intra-day trades.