Financial Services, Banking Stocks See Sharp Correction

On Monday, major financial services stocks were trading in red. Nifty Bank index fell 6.5 percent to touch a low of 18,668.70, while S&P BSE Finance index slipped over 7 percent to 4,168.72.

Among stock that saw sharp corrections, Shriram Transport Finance fell over 16 percent while Bajaj Finance, Mahindra & Mahindra Financial Services, Manappuram Finance and Housing Development Finance Corporation (HDFC) were down 12 percent each.

Shares of Shriram City Union Finance fell 9 percent, Ujjivan Financial Services 10 percent, Bandhan Bank crashed over 13 percent, Federal Bank fell 9 percent, HDFC Bank slipped over 8 percent, RBL bank was down nearly 6 percent, Kotak Mahindra Bank and ICICI Bank nearly 8 percent each, State Bank of India fell 5 percent and Bank of Baroda fell 3.5 percent.

Stocks of lenders have been under pressure amid the sell-off triggered by the COVID-19 pandemic due to concerns over a rise in NPAs (non-performing assets) as economic activity came to a halt due to the government imposed lockdown. Further, the cut in repo rate and EMI break announced by the Reserve Bank of India (RBI) to support the economy and citizens is also expected to reduce interest income of these lenders.