Sign in Subscribe
Banks (Finance)

Banking Stocks Plummet as Foreign Funds Continue Selling Spree

Strategic Insights

— 1 min read

Bank stocks were among the top losers in Wednesday's trading sessions as foreign funds continued to sell Indian equities. Traders were cautious ahead of the Reserve Bank of India's monetary policy on Friday, which led to a decline in major banking stocks. Despite this, HDFC Bank bucked the weak trend by rising 1.6%. Money managers attributed the fall in large banking stocks to the FPI sell-off, stating that the stocks are likely to rebound once the selling recedes.

Key Takeaways:

  • The Nifty Bank index fell almost 1% on Wednesday, while the Nifty PSU Bank Index dropped 2.8%.
  • The Nifty Bank index closed at 43,964.05, with Axis Bank tumbling 4.7% and SBI and IndusInd Bank falling 2-3%.
  • ICICI Bank declined 0.9%, while HDFC Bank rose 1.6% and bucked the weak trend.
  • Money managers attributed the fall in large banking stocks to the FPI sell-off, stating that the stocks are likely to rebound once the selling recedes.
  • The fall in banking stocks is due to the large FPI exposure in the banking sector and profit booking in the market.
  • PSU Bank Index has jumped almost 40% in the past six months, while the Nifty Bank index has advanced 7.23% against Nifty's upmove of 10.70% in the same period.
  • Andrew Holland, CEO-Avendus Capital Alternate Strategies, expects the support levels for the banking index to hover around 42,000.
  • Paras Bothra, Chief Investment Officer, Ashika AIF fund, expects these stocks to rebound once the FPI selling recedes and stated that post-corrections in the market, banks are likely to outperform.

Statistics:

  • The Reserve Bank of India's monetary policy will be announced on Friday.
  • In the past six months, the Nifty Bank index has advanced 7.23% against Nifty's upmove of 10.70%.
  • PSU Bank Index has jumped almost 40% in this period.
  • The Nifty Bank index closed at 43,964.05.
  • Axis Bank fell 4.7%, while SBI and IndusInd Bank fell 2-3%.
  • ICICI Bank declined 0.9%, while HDFC Bank rose 1.6%.

Sources:

  • Bloomberg Quint
  • Moneycontrol

Read more