Data showed that 15 stocks from the Nifty Bank and BSE Private Banks index have lost a total of Rs 2,67 lakh crore in market value since HDFC Bank's quarterly results on January 16. HDFC Bank alone accounted for around Rs 1.90 lakh crore of this m-cap depreciation. "While the banking sector stocks have seen a significant decline in the last few days, the rapidity of the decline has taken everyone by surprise," Share.Market Research stated in a statement. In the instance of HDFC Bank, numbers were down, and analysts speculated that a tight liquidity situation was making it difficult for the bank to mobilize deposits.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, stated that HDFC Bank's substantial weightage in important indices is putting pressure on both the futures and options markets, as well as the cash market.
"Given HDFC Bank's strong index weightage, it is putting further pressure on other banking equities. All eyes are on rate reduction in the United States and Europe. We believe US treasury yields need to fall. "As long as there are no rate cuts, bank shares may remain under pressure," Bathini warned.
The US 10-year bond yield last stood at 4.16 percent, compared to 3.86 percent at the end of December. The recent surge in bond yields has sparked capital outflows from emerging markets.
"Because valuations in India are high, FPIs utilized the excuse of HDFC Bank's lower-than-expected results to force large sales. On January 20, V K Vijayakumar of Geojit Financial Services stated that FPIs had also boosted their short positions.
Data indicated that FPIs purchased financial stocks worth Rs 1,248 crore in the first half of January, prior to HDFC Bank's results, compared to Rs 6,277 acquisitions in the second fortnight of December. FPIs were net purchases of shares worth Rs 3,433 crore in the first fortnight of January, but then turned big sellers. According to the latest tally, they were net sellers of Rs 16,601 crore in stocks in January.
To minimize wholesale borrowings in the funding mix, HDFC Bank and Nomura India underlined that deposit growth must significantly outstrip loan growth. "This is not the current trend and will stay a challenge, as system liquidity remains tight and deposit mobilization stays tough," the report added.
HDFC Bank shares have declined 15% since January 16. RBL Bank and IndusInd Bank have fallen 14 percent since then. In the instance of RBL Bank, YES Securities stated that an elevated slippage ratio during a relatively mild cycle indicates intrinsic cyclicality. It stated a significant increase in slippages from an already high level necessitated prudence. Analysts at IndusInd Bank reported an increase in both retail and corporate slippages, as well as a drawdown from buffer reserves, despite earlier guidance of a buildup.
Shares of AU Small Finance Bank Ltd, IDFC First Bank Ltd, City Union Bank Ltd, The Federal Bank Ltd, and YES Bank all fell by 6-7 percent. Shares of State Bank of India, Bank of Baroda, Kotak Mahindra Bank Ltd, Axis Bank, and Bandhan Bank Ltd have all declined since January 16.
In the instance of Axis Bank, given its higher share of bulk and deposit challenges, Nuvama Institutional Equities finds Axis Bank to be more vulnerable on loan growth and NIM compared to ICICI Bank and Kotak Mahindra Bank.
