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Our Bureau

Mumbai, Nov. 18 The selling at the banking counters continued into Tuesday, despite several announcements from Reserve Bank of India that it intended to improve liquidity for banks.

On Tuesday, the BSE Bankex was again among the worst performing sectoral indices, tanking 4.5 per cent. From a week ago, it has dipped close to 13 per cent.

Marketmen said they expected RBI to cut interest rates on Saturday. As that did not happen, the banking stocks have seen a lot of selling Monday onwards.

“The measures taken on Saturday were not to improve liquidity but to rather manage liquidity and to improve the credit flow in the country. With inflation dropping to single digit levels, investors were expecting the RBI to cut either the CRR or repo rates,” said the head of research at a brokerage.

“Financial sector stocks all over the world are having a tough time because of the liquidity crisis,” said a banking analyst.

On Tuesday, ICICI Bank was down 6.79 per cent at Rs 360.75 and SBI lost 5.12 per cent at Rs 1,108.3. These were among the worst performing Sensex scrips. Axis Bank fell 4.03 per cent, Bank of India declined 3.36 per cent, Kotak Mahindra Bank lost 9.95 per cent, Yes Bank slid 5.06 per cent, Federal Bank came down 2.54 per cent, Oriental Bank lost 0.55 per cent and IDBI Bank was down 0.46 per cent.

The private sector bank stocks are being sold more than the PSU scrips. “Private sector banks have advanced larger amounts to real estate companies and now, with the increase in their NPAs, investors are shying away from these scrips,” said Mr Alex Mathew, Head of Research at Geojit Financial Services.

FII selling is another reason that private banks’ stocks are faring worse than PSU scrips. “The FII holding in private sector banks is much more than in the PSU banks. With the FIIs offloading everyday to cope with redemption pressures back home, it comes as no surprise that the private sector bank scrips are being hammered more,” said the director of research at a stock broking firm.

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