PSU bank stocks plunge up to 12% on asset quality woes

NEW DELHI: Government-owned banks had been hammered mercilessly on Monday on fears that the return of state-wide lockdowns, like one extensively speculated in Maharashtra, might dent asset quality and mortgage development going forward.

Nifty PSU Bank plunged 9.26 per cent led by

, Canara Bank, Punjab National Bank and Bank of India that dropped over 10 per cent every in a single session. .

Investors are already involved concerning the extent of the influence of the nationwide lockdown on steadiness sheets of banks, and the renewed Covid restrictions have augmented these fears.

“The gap-down opening on Monday’s trade widened as the day progressed with all sectoral indices in the red as investors worried about the economic fallout on account of the surge in coronavirus cases. Asset quality concerns spooked banks and PSU stocks across sectors were the worst hit amidst lockdown worries,” mentioned S Ranganathan, Head of Research at LKP Securities.

The Nifty Private Bank index additionally fell drastically. It ended down 5.23 per cent led by

, IDFC First Bank and that plunged 8-11 per cent. Nifty Bank tanked 5.1 per cent.

ICRA Ratings mentioned on a professional forma foundation, the gross non-performing property (NPAs) and internet NPAs for banks had been decrease as on December 31, 2020 in contrast to March 31, 2020.

“Loan restructuring estimated at 1.3-1.5 per cent levels, much lower than initial estimates. However, sizeable increase in overdue loan book remains monitorable as the second Covid wave could impact the economic recovery,” mentioned the score company.

Nifty Financial Service declined 4.55 per cent led by Shriram Transport Finance and M&M Financial Services that fell over 11 per cent. Analysts are additionally apprehensive concerning the prospects of housing finance corporations.

ICRA estimates housing finance corporations’ GNPAs for FY2021 to be greater by 50-100 foundation factors, in contrast to FY2020, and the identical to stay elevated in FY2022 as properly.

Overall, the 30-share pack Sensex plunged 1,707.94 factors or 3.44 per cent to shut at 47,883.38. Its broader peer NSE Nifty tanked 524.05 factors or 3.53 per cent to 14,310.80.

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