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Our Bureau

Mumbai, Oct. 18 With the Sensex dropping 717 points on the Bombay Stock Exchange, the Bankex index slumped the most. It closed 573 points or 6 per cent 9034.68 against its previous close of 9607.61. It touched a high of 9695 and a low of 8938.95 on Thursday. None of the Bankex constituents ended in green. State Bank of India was the biggest loser (8.26 per cent), followed by Union Bank of India (7.45 per cent) and ICICI Bank (7 per cent). Federal Bank was least affected by 0.92 per cent.

A few analysts cited interest rates as a reason. “For the past three quarters, the interest rates have been going up. This might have cautioned the investors from investing in this sector”, commented a research analyst.

Others felt it was due to the policies and measures taken by the regulators to keep the markets in check. The RBI policies which will be announced at the end of the month seem to have an adverse effect on the banking index, say analysts.

“Negative sentiment is what is going through the minds of the investors right now with the RBI ready to announce their policies on the 30th of this month”, said a market-watcher. Rumours of the CRR prices going up may also be another reason for BankEx being in red, some dealers said.

While the players in the equity market may have been a little concerned, the fundamentals were strong . “There is nothing fundamentally wrong with them, they have a strong asset quality. Their gross NPA levels are much lower than what it was last year, falling by around 18 per cent, and most of the banks have declared better profits than last year”, said a senior analyst. He added that “health wise” the sector was quite good.

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