Double whammy for banking stocks; hit by RBI and US Fed

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Double whammy for banking stocks; hit by RBI and US Fed
YES Bank: Quotes, News
BSE 1317.05BSE Quote8.25 (0.63%)
NSE 1317.40NSE Quote8.6 (0.65%)
Syndicate Bank: Quotes, News
BSE 76.00BSE Quote0.15 (0.20%)
NSE 76.15NSE Quote0.1 (0.13%)
Banking stocks have been badly hit in the last few days with the Bank Nifty dropping to levels not seen since October 2013, hit by the RBI's decision to hike repo rates and the Fed's decision to stay the course on QE3 tapering. Read more on the RBI policy here

ICICI Bank fell below the Rs 1000 mark, as higher non performing assets left investors worried. Stocks like IDBI Bank were very near their 52-week lows, while other PSU banking stocks like Syndicate Bank and Canara Bank have lost nearly 20 per cent in the last couple of weeks.

IndusInd Bank which was trading at Rs 434 on the National Stock Exchange on Jan 21 has slumped to Rs 374 in trade today witnessing sharp losses.

Axis Bank on the other hand which was traded at Rs 1219 on Jan 21, has dropped sharply to Rs 1118. Yes Bank has slumped almost 20 per cent, despite putting up a splendid Q3 financial performance.

The RBI in its recent policy hiked the repo rates (rates at which it lends to banks). This was as against an overwhelming belief that the central bank would hold rates steady. The decision to hike rates has seen banking stocks falling sharply.

To compound worries for the banking stocks was Wednesday's decision by the US Federal Reserve to continue tapering its asset purchase programme or QE3 . Read more on QE3 here.

The tapering off of QE3 has further affected stock market sentiments and the worst hit our the banking stocks in trade today.

Story first published: Thursday, January 30, 2014, 10:45 [IST]
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