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Bank stocks wilt under global pressure

india Updated: Nov 20, 2008 12:12 IST

Banking stocks on Thursday tumbled in early trade on the Bombay Stock Exchange, the fall led by ICICI Bank, which was down 10 per cent after credit rating agency Fitch cautioned about the asset quality of the lender.

Mirroring the fall, the BSE banking index opened at 4,365.56 points and dipped to a low of 4,344.59, down 5.48 per cent. It was later quoting at 4,363.31, down 233.64 points.

Marketmen said "the dip in banking stocks was largely in tandem with global markets where financial stocks like Citigroup and Barclays are getting battered on fears of protracted recession. Besides, domestic markets on Thursday followed the negative cues from global markets, especially from Wall Street, where the Dow closed at a five-year low yesterday."

All the constituents of the banking index were trading in negative territory and the hardest-hit was the scrip of ICICI Bank, which opened at Rs 329.70 and plunged 10.26 per cent to an intra-day low of Rs 312.

Brokers said the decline in ICICI Bank was mainly because of the statement issued by Fitch Ratings on Wednesday.

Fitch has said although the overall financial position of ICICI Bank still remains adequate, "the ratings may be downgraded if the bank's asset quality, which is already showing signs of weakness, deteriorates significantly more than anticipated, at this current juncture."

Private lenders were more battered than their PSU peers as HDFC Bank suffered a loss of nearly seven per cent to Rs 825.50. It was later trading at Rs 827.95. State Bank of India, plunged 5.04 per cent to Rs 1,025, while Punjab National Bank slipped 3.92 per cent at Rs 428.

Other major losers in the banking index include Yes Bank (down 5.13 per cent), Axis bank (down 3.37 per cent), Indian Overseas Bank (5 per cent), Canara Bank (down 3.45 per cent) and Bank of Baroda (down 3.22 per cent).