In HDFC Bank, for instance, they have reduced their holding after a gap of more than two years
Foreign institutional investors (FIIs) have reduced their exposure in Indian banking stocks during the quarter ended September 2013 on concerns of margins stress due to slowdown in the economy, rising non-performing assets and higher cost of funds.
The overseas investors have cut their holdings in public as well as private sector banks during the recently concluded quarter. Of the 18 banks that have thus far released the September quarter shareholding pattern, data suggests that FIIs have reduced their stake in 16 banks, while only in two banks – Bank of Baroda and UCO Bank – they have raised their holdings marginally over the previous quarter.
FIIs’ stake in HDFC Bank, IndusInd Bank, ING Vysya Bank, IDBI Bank, Indian Bank, Andhra Bank, Canara Bank and Karnataka Bank has declined in the range of 1 – 6% in July–September quarter (Q2), the data shows.
In HDFC Bank, they have reduced their holding after a gap of more than two years. Their stake in the country’s largest private sector lender has declined by nearly one percentage points at 33.61% in September quarter. FIIs held 34.49% stake at the end of June quarter.
In Karnataka Bank, their stake has declined the most by 6.4 percentage points to 16.45% from 22.83% in past three months. The stock had slipped nearly 26% to Rs 83.40 from Rs 112 during the quarter.
Currency woes
Most banking stocks had plunged between 20 – 40% in Q2 after the Reserve Bank of India (RBI) announced slew of measures to support the Indian rupee, which depreciated 14% to 67.73 against the US dollar in early September, including hiking the lending rates for banks to make the currency dearer.
The National Stock Exchange banking index, Bank Nifty, which measures price movement of banking shares, had reported its sharpest quarterly fall of 23% as compared to less than 5% decline in benchmark CNX Nifty.
Indian Bank, Union Bank of India, Canara Bank, United Bank of India, YES Bank, Andhra Bank, Dena Bank, Federal Bank and Corporation Bank had tanked more than 30% during the quarter.
From October, Bank Nifty has also recovered 7.5% compared to 4.7% rise in benchmark index after the RBI has yet again announced measures to ease liquidity conditions by cutting the marginal standing facility (MSF) rate by another 50bps, to 9.0%.
Outlook
Meanwhile, most analysts feel that the performance of banking sector is likely to remain dismal even in Q2FY14, as most of the banks to report moderate growth in revenue owing to tepid average growth in loan book and declining traction in core fee income.
The bank’s NIM (net interest margin) to be under pressure during the quarter on account of significant increase in bulk deposit rates, said an analyst with Karvy Stock Broking.
“Q2FY14 will be a very different quarter versus last few quarters, with asset quality issues persisting for government banks, but banks also to see elevated margin pressures yoy / qoq due to rise in short-term rates and lower lending rates yoy; mark-to-market hits arising out of rise in bond yields, despite recent RBI dispensation and also wage revision provisions,” says analyst at Bank of America Merrill Lynch.
However, analysts at Edelweiss Securities suggest that the flurry of actions undertaken by the RBI to curb rupee volatility coupled with its reversal on interest rate stance is likely to delay economic recovery process. “If current difficult business environment.
Foreign institutional investors (FIIs) have reduced their exposure in Indian banking stocks during the quarter ended September 2013 on concerns of margins stress due to slowdown in the economy, rising non-performing assets and higher cost of funds.
The overseas investors have cut their holdings in public as well as private sector banks during the recently concluded quarter. Of the 18 banks that have thus far released the September quarter shareholding pattern, data suggests that FIIs have reduced their stake in 16 banks, while only in two banks – Bank of Baroda and UCO Bank – they have raised their holdings marginally over the previous quarter.
FIIs’ stake in HDFC Bank, IndusInd Bank, ING Vysya Bank, IDBI Bank, Indian Bank, Andhra Bank, Canara Bank and Karnataka Bank has declined in the range of 1 – 6% in July–September quarter (Q2), the data shows.
In HDFC Bank, they have reduced their holding after a gap of more than two years. Their stake in the country’s largest private sector lender has declined by nearly one percentage points at 33.61% in September quarter. FIIs held 34.49% stake at the end of June quarter.
In Karnataka Bank, their stake has declined the most by 6.4 percentage points to 16.45% from 22.83% in past three months. The stock had slipped nearly 26% to Rs 83.40 from Rs 112 during the quarter.
Currency woes
Most banking stocks had plunged between 20 – 40% in Q2 after the Reserve Bank of India (RBI) announced slew of measures to support the Indian rupee, which depreciated 14% to 67.73 against the US dollar in early September, including hiking the lending rates for banks to make the currency dearer.
The National Stock Exchange banking index, Bank Nifty, which measures price movement of banking shares, had reported its sharpest quarterly fall of 23% as compared to less than 5% decline in benchmark CNX Nifty.
Indian Bank, Union Bank of India, Canara Bank, United Bank of India, YES Bank, Andhra Bank, Dena Bank, Federal Bank and Corporation Bank had tanked more than 30% during the quarter.
From October, Bank Nifty has also recovered 7.5% compared to 4.7% rise in benchmark index after the RBI has yet again announced measures to ease liquidity conditions by cutting the marginal standing facility (MSF) rate by another 50bps, to 9.0%.
Outlook
Meanwhile, most analysts feel that the performance of banking sector is likely to remain dismal even in Q2FY14, as most of the banks to report moderate growth in revenue owing to tepid average growth in loan book and declining traction in core fee income.
The bank’s NIM (net interest margin) to be under pressure during the quarter on account of significant increase in bulk deposit rates, said an analyst with Karvy Stock Broking.
“Q2FY14 will be a very different quarter versus last few quarters, with asset quality issues persisting for government banks, but banks also to see elevated margin pressures yoy / qoq due to rise in short-term rates and lower lending rates yoy; mark-to-market hits arising out of rise in bond yields, despite recent RBI dispensation and also wage revision provisions,” says analyst at Bank of America Merrill Lynch.
However, analysts at Edelweiss Securities suggest that the flurry of actions undertaken by the RBI to curb rupee volatility coupled with its reversal on interest rate stance is likely to delay economic recovery process. “If current difficult business environment.
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