Shares in Syndicate Bank slid by 3 per cent at 1Rs 09, while Indian Overseas Bank dropped 2.11 per cent to Rs 64.80 and Oriental Bank of Commerce fell 2.11 per cent to Rs 234.80.
Moody's attributed the cut in the ratings to falling asset quality, pressure on profitability and capital generation.
It revised IOB's standalone rating from D to D- and revised the outlook from ‘stable' to ‘negative'. However, it reaffirmed the Bank's Baa3/Prime-3 foreign currency deposit ratings.
Moody's cut Syndicate Bank's BFSR to D from D+ and downgraded other instruments, including the local currency deposit rating, to Baa3/P-3 from Baa2/P-2 and the senior unsecured debt rating to Baa3. The foreign currency senior unsecured debt was cut to Baa3 from Baa2 on Syndicate Bank's medium-term note programme.
Banking stocks have come under severe pressure with even private sector banks declining over the last few weeks. However, PSU banks have been the worst hit on fears of deteriorating asset quality. Several PSU banking stocks have now hit their 52-week lows.