Rising concerns over non-performing assets (NPAs) and asset valuations saw banking stocks taking a beating on the BSE Sensex on Thursday with the BSE banking index, Bankex, closed down by 4.15 per cent at 3,728.22 points.
“Though the Reserve Bank of India’s move to cut rates is a positive sign, people are worried about the asset valuations of banks. This, along with a possible rise in NPAs in the foreseeable future has seen banking stocks taking a plunge,” said Hitesh Agrawal, head, research, Angel Broking.
The shares of Kotak Mahindra Bank fell the most (7.54 per cent) to Rs 216.30. Th shares of Yes Bank (down 5.22 per cent to Rs 43.60), ICICI Bank (down 5.17 per cent to Rs 269.60), and Punjab National Bank (down 4.46 per cent to Rs 292.30) were the other top losers.
“Banks are worried over the credit quality of corporates,” said Agrawal.
The Sensex ended the day 248.57 points down at a three-year low of 8,197.92. Foreign investors (FIIs) were sellers on the back of a gloomy economic outlook. The rupee rose to 51.65 per dollar from its previous close of Rs 51.53 per dollar. The fast depreciating rupee is another trigger for FIIs to sell.