Bank stocks bear the brunt of selling pressure

The bank stocks had to bear the brunt of selling pressure after the RBI came out with its mid-quarter monetary policy with the CNX Bank Nifty losing about 670 points 45 minutes after the policy announcement was made.

The market itself, which was in a sombre mood ahead of the policy announcement, with the Nifty having 23 stocks in the green against 27 shares that were in the red, went into a tizzy with the Nifty losing about 170 points. The Nifty had 43 losers against seven gainers.

The Indian rupee, which was trading around Rs 61.91/dollar ahead of the announcement, also shed some value losing about 60 paise to trade around Rs 62.20 level.

Policy announcement

A lot of expectations were built into possible reliefs that the new RBI Governor Raghuram Rajan would offer in his first policy announcement after taking charge. This was given a further boost after the unexpected decision of the US Fed Reserve Chairman to hold fire and stick to the stimulus.

All this created a euphoria that RBI Governor would at least hint at laying the roadmap for softening of interest rates. But the Indian scenario was different because of the stubbornly high inflation, particularly food inflation and the huge current account deficit, offering little leeway to the RBI Governor to take drastic steps.

The googly delivered by RBI hit the bank stocks particularly hard with all the 12 stocks in the CNX Bank Nifty crashing into the red. There was no respite for the private sector banks and they shed as much value as the PSU bank stocks.

Union Bank, PNB and YES Bank were the biggest losers in terms of percentage. While Union Bank shed Rs 12.60 or 9.05 per cent to trade at Rs 126.70, PNB was down by Rs 50.65 at Rs 506.15 and YES Bank lost Rs 43.30 to trade at Rs 343.40.

But SBI and Axis Bank were the biggest losers in terms of value. SBI lost Rs 104.45 to Rs 1,703.30 and Axis Bank was down by Rs 67.15 to Rs 1,073.05. BoB (-Rs 37.50), ICICI Bank quoting at Rs 985.25 (-Rs 51) and HDFC Bank trading at Rs 638.90(-Rs 44.30) were among the major losers.

Among the major Nifty losers were interest rate sensitive automobile stocks like M&M, Hero MotoCorp, Maruti etc.

While Bajaj Auto lost Rs 43.15 to trade at Rs 2,010, Hero MotoCorp was down by Rs 54.20 to Rs 1,985.35, M&M shed Rs 21.20 at Rs 846.35, Maruti lost Rs 63.40 to trade at Rs 1,416.60.

Housing finance major HDFC, which was rising on expectations of some tinkering with interest rates, was another major loser by trading at Rs 799.85, a loss of Rs 34.70.

Among the gainers were HCL Tech up by Rs 24.50 at Rs 1,048.50, Lupin and Sun Pharma also gained albeit moderately.

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