Wednesday 25 September 2013

Banking shares extend falls on RBI move

Bank Nifty has declined over 10% or 1,157 points in past four trading sessions as compared to nearly 5% fall in CNX Nifty.

Banking shares continue under pressure on fourth day in a row, expect State Bank of India (SBI), all remaining eleven banks from the Bank Nifty are trading lower by up to 4% on NSE.

HDFC Bank, Canara Bank, YES Bank, Bank of India, Kotak Mahindra Bank, ICICI Bank and Union Bank of India are down 2-4%.

Most of these banks are down 10-20% in past four trading sessions after the Reserve Bank of India (RBI) in a surprise move, raised its key policy rate after a monetary policy review on Friday, 20 September 2013.

The NSE banking share index Bank Nifty has slipped 1.8% or 184 points at 9,992 points in noon deals, declining over 10% or 1,157 points in past four trading sessions from Thursday’s close of 11,149. The benchmark index has dipped nearly 5% during the same period.

In an attempt to tame high inflation, which is partly fueled by the currency's recent slump against the dollar, the RBI raised the repo rate by 25bp to 7.50% from 7.25%.

Among the individual stocks, YES Bank has dipped nearly 20% in past four trading days, followed by Union Bank of India (19%), Oriental Bank of Commerce (18%), Bank of India (17%) and Central Bank of India (16%) on NSE.

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