Banking shares fell sharply in trade with many public sector banks hitting their 52-week lows, while others were trading near their 52-week lows.
State Bank of India hit a 52-week low of Rs 231.60, while Bank of India also dropped to a new 52-week low of Rs 130.35 on the National Stock Exchange. Banks like Oriental Bank of Commerce, Punjab National Bank and Syndicate Bank were trading very near their 52-week lows.
The sustained selling was on the back of worries that non performing assets may continue to deteriorate if conditions in the steel industry get worse. It maybe noted that the steel industry has been adversely affected by the slump in prices amidst waning demand from China.
The worry is that this could result in losses and also a rise in non performing assets, particularly of PSU banks. Another reason for the fall is drop in interest rates by HDFC Bank, which many believe may trigger a rate war in the banking sector and a squeeze on margins.