Bank, NBFC woes wipe out 25% of sen­sex tax sop gains Dives 700 Pts In­tra­day Over Failed E-Trans­ac­tion, Ex­po­sure

The Times of India (New Delhi edition) - - Times Global - TIMES NEWS NET­WORK Prev. Close | 38,667 -22.8 -8.7 -6.3 -5.5 -3.0 -2.9 -2.0 -0.7 Yes Bank RBL Bank In­dusInd Bank SBI City Union Fed­eral Bank ICICI Bank Axis Bank

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.

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