Banking Stocks Hit 52-Week Lows; What's Bothering Investors?

Business

oi-Sunil

By Sunil Fernandes

Published: Friday, December 11, 2015, 11:31 [IST]

Corporation Bank, Canara Bank, Dhanlaksmi Bank, Allahabad Bank, Indian Bank, South Indian Bank, J&K Bank and Axis Bank are some of the banking stocks that have hit 52-week lows this week.

Banking stocks have fallen badly in the last few days. Investors continued to remain worried that the new lending norms will hit net interest margins.

The new method of lending rate calculation is going to see the Net Interest Margins of banks falling. According to reports the fall could be anywhere between 10 and 30 basis points, which is bad news for banks that are already reeling under worries over bad debts.

Apart from this investors remained worried that non performing assets may not yet have peaked and there would be a few more quarters of pain.

Competition from new banks like Bandhan Bank and IDFC bank, apart from a host of payment banks, is only going to intensify worries for the sector.

Also, it is unlikely that the Reserve Bank of India will cut interest rates anytime soon, which means there is no incentive for investors to now bet on these stocks.

Interestingly, select private sector banking stocks like Axis Bank, South Indian Bank and J&K Bank have also joined the growing list of 52-week lows. In fact, even stocks like ICICI Bank, which hit a 52-week low of Rs 248 in Sept, is not too far away from going back to that level.

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