Moody's has downgraded the stock from BA1 to BA2. The rating agency has cited the weak asset quality and in ability meet loss-absorption as amongst the reasons for the downgrade.
Other banking stocks too seemed to be sentimentally affected with State Bank of India, Punjab National Bank and HDFC Bank all down between 2% to 3%.
The last few quarters have been tough for the banking sector which has been affected by asset quality and low net interest margins, particularly the public sector banks. The recent CRR cut by the RBI might breathe fresh life into the sector, though bankers would prefer the RBI to cut repo rates going forward.
RBI officials are to meet next month in their Monetary Policy Review and it would be interesting to see what action is taken on the repo rate front.