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FPIs Pull Out Aggressively From Indian Banks In March Quarter
FPIs for the March ended quarter have withdrawn a huge amount from large Indian banks as the coronavirus crisis heightened concerns over growth in bad loans as well as lower lending amid an extended lockdown.
These institutions own a higher percentage in these banks much due to their weightage on the headline indices and the sell-off spurred from February 19 when concerns over the economic fall-out due to covid 19 started surfacing.
Notably, the stake by FPIs has been lowered in 9 out of 11 Bank Nifty constituents in the March quarter as against the previous quarter.
| Banks | % holding of FPIs in March quarter | % holding of FPIs in December quarter |
|---|---|---|
| SBI | 9.47 | 10.84 |
| Kotak Mahindra Bank | 39.17 | 39.75 |
| HDFC Bank | 29.8 | 30.8 |
| ICICI Bank | 35.33 | 36.15 |
| Bank of Baroda | 4.57 | 4.83 |
| PNB | 2.18 | 2.36 |
| IDFC First Bank | 13.56 | 15.1 |
| Bandhan Bank | 13.05 | 13.92 |
From the lows, Bank Nifty has recovered significantly and as RBI has been doing all its bit to restore confidence and pushing banks to increase their through more incentives such as the recent cut in reverse repo rate, there is likely to be seen a further rebound in banking stocks.
Thee biggest hit (fromCovid-19) will be in the banking sector. Retail and corporates have taken a hit so delinquencies may rise," said Sanjiv Bhasin, director, IIFL Securities.
UBS has cut target prices by 5-41 per cent on banking stocks on the rationale that risk-reward remains unfavourable while risks to collections are rising.
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