Shares in banking majors took a breather after the conclusion of the 2-day Gyan Sangam meet. The shares of banks had risen sharply, ahead of the meet on hopes that there would be some concrete measures for the banking sector. However, following the lack of major decisions, select stocks saw a reaction in their share prices.
Bank of Baroda was the biggest loser from the Bank Nifty space, while other notable losers were ICICI Bank, State Bank of India and Canara Bank. Axis Bank and IndusInd Bank managed to buck the trend and were trading higher.
Rising NPAs, has raised question marks on the capitalization of public sector banks, which have to now depend on the government for additional funding to meet capital requirements.
Banks have also been unable to lend due to lack of adequate capital, which is likely to hit the economy in the more longer term.
PSU banking stocks like PNB, Bank of India and Corporation Bank also saw a sharp reaction in their share prices. Many analysts say that banking stocks are unlikely to move higher, unless there is a definite reduction in the non performing assets of the banks.