MUMBAI: Public sector banks are unlikely to get a breather. On Monday, as more bad news tumbled out, the Nifty PSU Bank index hit a 19-month low.
Owing to intense selling pressure amid reports of Union Bank of India’s (UBI) credit exposure to Nirav Modi and Mehul Choksi firms, shares of state-run banks were battered, with the Nifty PSU Bank index slipping 2.2 per cent to Rs 2,794 during early trade.
This was lower than the levels last seen on August 8, 2016. Unconfirmed reports pegged UBI’s exposure to the two jewelers at Rs 3,000 crore.
The Nifty PSU Bank index slipped 2.2 per cent and it was the lone loser among sectoral indices as against the Nifty 50 index. However, it regained some ground to close the day in green.
After the PNB loan fraud last month, the index plunged 20 per cent, while most of the 21 listed state-run banks saw steep price falls in excess of 30 per cent in the past 30 days.
If this wasn’t enough, shares of banks like Andhra Bank touched a five-year low on Monday.
The tumbling share prices have been a drag on the overall market capitalization (m-cap) of banks with the sector losing a staggering Rs 90,000 crore in the past one month to end at Rs 3,84,600 crore on Monday as against the Rs 4,75,300 crore as on February 12, 2018.
The SBI emerged as the largest loser in absolute terms, with a m-cap erosion by Rs 33,900 billion at Rs 2,15,200 crore, followed by PNB at Rs 1,67,00 crore, Bank of Baroda Rs 9,100 crore, and Bank of India Rs 6,200 crore.