19-Apr-2024Today's Market Indicators


Banks slump as Moody's changes outlook on Indian banks to negative
(15:19, 03 Apr 2020)
Banks stocks witnessed steep selling pressure after Moody's Investors Service on 2 April 2020 changed the outlook for the Indian banking system to negative from stable.

RBL Bank (down 15.5%), Axis Bank (down 8.91%), ICICI Bank (down 8.16%), IndusInd Bank (down 7.87%), Bandhan Bank (down 6.62%), City Union Bank (down 6.59%), IDFC First Bank (down 4.61%), Kotak Mahindra Bank (down 4.46%), Federal Bank (down 3.63%) and HDFC Bank (down 1.66%) were top losers in private sector bank space. The Nifty Private Bank index was down 5.44% at 9,157.95.

Canara Bank (down 6.82%), J&K Bank (down 6.25%), SBI (down 5.92%), Bank of Baroda (down 4.98%), PNB (down 2.46%), Union Bank (down 1.04%), Central Bank of India (down 0.82%), Indian Overseas Bank (down 0.71%) and UCO Bank (down 0.55%) were top losers in PSU Bank segment. The Nifty PSU Bank index was down 3.96% at 1,232.35.

Moody's said banks asset quality will deteriorate across the corporate, small and medium enterprises and retail segments, leading to pressure on profitability and capital. While funding and liquidity at public sector banks (PSBs) will be stable, growing risk aversion in the system following a default by a private sector bank will increase funding and liquidity pressure on small private sector lenders.

It added that disruptions from the coronavirus outbreak will exacerbate India's economic slowdown. A sharp decline in economic activity and a rise in unemployment will lead to a deterioration of household and corporate finances, which in turn will result in increases in delinquencies.

The credit rating agency also said deteriorating profitability and loan growth will hurt capitalization.

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