Bank, NBFC woes wipe out 25% of sensex tax sop gains Dives 700 Pts Intraday Over Failed E-Transaction, Exposure
Mumbai: Fears about the health of the NBFC sector, which in turn could impact the banking industry, pulled the sensex down by 700 points in late trades on Tuesday. But it recovered some of the losses to close 362 points lower at 38,305. The day’s fall was led by a 5.5% slide in banking giant SBI, along with several other lenders. By Tuesday’s close, the sensex has given up almost 25% of its gains after the government announced a slew of changes to corporate tax laws on September 20.
The day’s slide in banking and NBFC stocks started after market players got a hint that Rana Kapoor, the main promoter of troubled lender Yes Bank, sold a large chunk in the open market. This was aggravated by social media posts about failed online transactions on the bank’s site. As a result, the stock tanked 25% du
Sensex intraday on BSE ring the day, but closed just a tad higher from the lows at Rs 32 — still down by almost 23%. From a 52-week high of Rs 286 in April, the stock has now lost almost 90% of its value.
The stock of another lender, RBL Bank, also lost over 20% on talks that it had a huge exposure to NBFCs. However, after the management clarified that those were just rumours and the bank was in good shape, the stock recovered to close 8.7% down at Rs 300.
According to Axis Securities MD & CEO Arun Thukral,
Biggest bank losers on BSE (in %) there are growing concerns pertaining to banks in India about their exposure to real estate and NBFC sectors.
“These events have led to over pessimism and estimation of another bout of fresh NPAs coming from these sectors, aggravating the stress levels in the banking ecosystem. At the same time, we have a new business model emerging for banks driven by digitalisation, the government’s visible focus on financial inclusion and consolidation in the PSU banking space,” Thukral said. “While the banking sector faces near-term challenges in the form of investment and consumer slowdown, it is a proxy on the Indian economy with huge opportunities in terms of penetration.”
Dealers pointed out that the lenders stand to gain the most from the finance minister’s fiscal sops announced on September 20, but the current slide is hitting banking stocks the most. They say if the problems that are emerging in the NBFC and real estate sectors lead to a rise in NPAs for the lenders again, that may shave off the gains from the government’s tax sops.
The day’s selling was led by foreign funds with a net selling figure of almost Rs 1,300 crore, while domestic funds were net buyers at about Rs 1,500 crore, BSE data showed. Tuesday’s market loss also left investors poorer by Rs1.90 lakh crore with the BSE’s market capitalisation now at Rs 144.6 lakh crore.