Banking, financial stocks hammer down key indices

Hyderabad: Negative cues on Tuesday created tremors for banking and financial stocks on the domestic bourses. YES Bank and RBIL fell 23 per cent and nine per cent (22 per cent intra-day loss) respectively. YES Bank scrip tanked after a heavy offloading of 2.16 per cent stake by its promoter Rana Kapoor and associated promoter entities. Further, reports about disruption in digital transactions of several banks, also dampened the investor sentiment further. According to a regulatory filing, top officials at YES Bank offloaded shares worth Rs 731 crore. The steep fall in YES Bank stock alone trimmed investor wealth by Rs 2,500 crore. The bloodbath on Dalal Street eroded market capitalisation (mcap) by Rs 1.85 lakh crore to Rs 145 lakh crore. As a result, volatility in the Indian stock markets rose significantly. India VIX shot up by five per cent to 16.7 per cent.

YES Bank scrip fell 22.22 per cent and closed at Rs 32.20 as against the previous close of Rs 41.40. The 52-week high was Rs 286 and low was Rs 29.

Rana Kapoor, YES Capital India ltd, and Morgan Credits Pvt sold 552 lakh shares in the open market in just two sessions. When the staff of YES Bank joined the selling binge, it created Black Tuesday for the market. The staff of YES Bank reportedly sold shares to the tune of Rs 39 crore.

The panic selling in banking stocks created pressure on the key indices. BSE Sensex fell over 700 points intra-session and recouped losses later. Sensex closed the session with a net loss of 361 points or 0.94 per cent at 38,305 points. NSE Nifty eased 114 points or one per cent and closed at 11,360 points.

What triggered the panic selling in YES Bank shares? Indiabulls Housing Finance shares fell 34 per cent on Monday. YES Bank has large exposure in the housing finance company. YES Bank released an official statement saying that its exposure to a large mortgage lender (without naming Indiabulls) was fully secured. Investors need not worry.

It is estimated that YES Bank has Rs 250-crore cash credit exposure to Indiabulls. IndusInd Bank too has extended a term loan of Rs 500 crore.

YES Bank needs to enhance its capital adequacy ratio (CAR) to above 7.375 per cent as per the RBI standards. For this, the bank has to increase its capital. The bank had plans to raise up to $1billion in 2019. It raised Rs 1,930 crore in last August via qualified institutional placement.

Market observers were puzzled by the panic selling that spread to other banking stocks like RBL Bank. The scrip fell 22 per cent intra-session and later recovered to Rs 800, a net loss of nine per cent.

Vishwavir Ahuja, MD at RBL Bank, said: “The selling was speculative and misplaced. RBL Bank remains profitable and continues to grow. You’ll see our earnings results in next fortnight. Nothing has changed fundamentally in the bank.>

The top-traded stocks on volume basis include YES Bank, Vodafone, Indiabulls Housing, SBI and IDFC First Bank. Axis Bank, Indiabulls Housing Finance, SBI, YES Bank, HDFC were top scrips in value terms.