Thirteen banking stocks hit fresh 52-week low on RBI move

NEW DELHI: A day after the Reserve Bank of India ( RBI) halved the daily funds available from it to banks and raised the cash reserve requirement ( CRR), banking stocks suffered most in trade.


All the thirteen banking stocks plunged to their fresh 52-week low on the bourses. The Bank Nifty slipped, after rising for the past two days, to its lowest level seen in the month of September.

On Tuesday, the central bank reduced the liquidity adjustment facility (LAF) for each bank from 1 per cent of the total deposits to 0.5 per cent, thus limiting the access to borrowed funds from the central bank, in an effort to arrest the rupee slide.

Governor Duvvuri Subbarao cut the funds the RBI lends to individual banks under the liquidity adjustment facility (LAF) to 0.5 per cent of the deposits of a bank.

The changes announced on Tuesday evening, which essentially replaces a limit on overall bank borrowings from RBI with a daily cap for each bank, bring down the total quantum of funds available to all banks to Rs 37,000 crore, ET reported.

Analysts at top brokerage firms such as BofA-ML, Credit Suisse, Deutsche Bank, and JPMorgan are of the view that the RBI move to shore up the currency is negative for banks and will push policy rates further in a slowing growth environment.

"We think that the measures announced by the RBI will lead to further short-term correction in selected banking stocks as the markets are likely to interpret this as a 'pseudo' CRR hike and likely precursor to lending rate hikes," BofA-ML said in a report on Wednesday.

"Amongst private banks, we think Yes Bank, IndusInd Bank and Kotak Mahindra Bank may face more challenges. All NBFCs are also likely to be impacted as they borrow in the wholesale market," added the report.

Dolat Capital Market is of the view that the RBI measures are overall negative for banks. The brokerage firm has downgraded the banking sector to 'Neutral' from 'Positive'.

"Post the recent measures that the RBI has been announcing, we believe that it would impact the growth, margins and asset quality of banks going forward," added the report.

Dolat Capital is of the view that banks like Axis and Yes Bank which have a higher proportion of differential rate deposits will be vulnerable to margin pressure even if the measures are carried out for the short term.

Here is a list of thirteen banking stocks which have hit their 52-week low in trade on Wednesday:-