Banking stocks drop as global financial shares wilt

Wed. November 26, 2008; Posted: 01:04 PM

Nov 25, 2008 (The Economic Times - McClatchy-Tribune Information Services via COMTEX) -- UBKFF | Quote | Chart | News | PowerRating -- MUMBAI, India -- The weakness in financial companies across Asian markets on rising concern that the global credit crisis will stifle corporate profits pushed the Indian banking sector lower Monday. At 11:47 am, Bank Nifty dropped 2.7 percent to 4184 and BSE Bankex was down around 2.27 percent.

There were no gainers in the bank Nifty. The top losers were Union Bank (-3.57 percent), Bank of Baroda (-3.30 percent), Oriental Bank (-2.91 percent), Bank of India (2.38 percent) and Kotak Mahindra Bank (-2.36 percent). The private sector bank like ICICI and HDFC fell 2.28 percent and 2.29 percent respectively.

On futures front, Union Bank November futures price fell 3.84 percent while open interest added 4.36 lakh shares. Bank of Baroda futures price slipped 3.02 percent but added 65100 shares in OI and was trading at a premium of Rs 2 to spot. Bank of India skid 2.55 percent while the future was trading at a premium.

"Financial stocks are not favored and their earnings will continue to be under pressure due to the credit crisis. Despite the efforts from RBI to cut key rates, banks have not significantly cut their prevailing lending rates. Though banks have turned cautious lenders, there is very less demand for borrowing from the corporate putting pressure on top line and bottom line growth of the banks," said Kumar Sahay, banking analyst at Arnava Advisory.

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