Bank stocks drop amid foreign selloff
Bank stocks were among the top losers in Wednesday's trading sessions as foreign funds continued their selling spree of Indian equities. Traders were also cautious ahead of the Reserve Bank of India's monetary policy outcome on Friday.
The Nifty Bank index fell almost 1%, the Nifty PSU Bank Index dropped 2.8%, while the benchmark Nifty ended 0.4% lower.
«While RBI is expected to hold rates, the global factors like the rising bond yields and higher interest rates have led to negativity in the banking space,» said Andrew Holland, CEO-Avendus Capital Alternate Strategies.
«The support levels for the banking index are hovering over at 42,000 levels.» The Nifty Bank index closed at 43,964.
Axis Bank tumbled 4.7% on Wednesday. SBI and IndusInd Bank fell 2-3%.
ICICI Bank declined 0.9%. HDFC Bank rose 1.6%, bucking the weak trend.
Money managers said foreign selling is impacting banking stocks the most as they have the highest weights on the Sensex and Nifty.
«The fall in large banking stocks can be attributed to the FPI selloff,» said Paras Bothra, chief investment officer at Ashika AIF.
«Whenever FPIs are selling India. Banking stocks see a fall due to the large FPI exposure in the banking sector.» Bothra expects these stocks to rebound once the FPI selling recedes.
«The profit booking in these stocks is also because the market is under pressure,» said Bothra.
«Post the corrections in the market, banks are likely to outperform.»
