Banking benchmark indices on Monday witnessed a sharp fall led by Punjab National Bank (PNB) that fell over 10% after the lender was hit by yet another fraud.
S&P BSE Bankex fell 1020 points intra-day to 34320.74, before closing 970.05 points, or 2.74%, lower at 34370.46. Nifty Bank too fell 939.05 points intra-day to 30536.75 before closing 871.95 points, or 2.77%, lower at 30603.85. Both underperformed benchmark indices.
Despite domestic equity market ended in red on Friday after the Union Budget announcements, banking stocks ended in green after investors considered proposals for the banking sector as positive, including the Rs 70,000 crore recapitalisation plan for public sector banks in the current fiscal.
IN A FREE FALL
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- PNB has detected a fraud of Rs 3,805.15 crore by Bhushan Power & Steel Ltd
- The bank's stock fell 11.31% intra-day before closing at Rs 72.80 apiece on BSE, down 10.95% the previous close
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However, the banking stocks witnessed a sharp turn in investors' sentiments on Monday on account of Rs 3,800-crore fraud by Bhushan Power & Steel.
On Saturday, PNB said it has detected a fraud of Rs 3,805.15 crore by Bhushan Power & Steel Ltd and has reported it to the Reserve Bank of India. The exposure of Rs 3,800 crore includes domestic exposure of Rs 3,191 crore, overseas exposure of $49.71 million at the bank's Dubai branch and $38.51 million at its Hong Kong branch. PNB said the company misappropriated bank funds and manipulated books to raise funds from consortium lenders.
The bank's stock fell 11.31% intra-day before closing at Rs 72.80 a piece on BSE, down 10.95% the previous close. On NSE, it closed 11.25% lower at Rs 72.60 per scrip.
Other PSBs also reported sharp falls on Monday. While State Bank of India closed 3.98% lower on NSE, Bank of India ended 11.25% lower than its previous close. A number of public sector banks fell between 3.19% and 8.62%.
Amar Ambani, president and head of research, YES Securities, said, "News of Rs 3,800 crore fraud at PNB brought back memories of the Nirav Modi scam and raised fresh worries of more such skeletons in the closet, leading to fall in PNB stock as well as in other public-sector banks".
According to an analyst, on condition of anonymity, bank stocks' sharp fall is on account of worries over a poor June quarter coupled with the minimum shareholding proposal and PNB scam.
"The proposal of increasing public shareholding from 25% to 35% pose a challenge for many public sector banks with high government holding. With recapitalisation, promoter holding in some of the state-owned banks usually go up while they struggle to offload stake through various routes. The timeline for this gets extended almost every year. The government must adhere to its own rule before asking private companies to follow it," the analyst said.
Meanwhile, Bajaj Finance on Monday also had a sharp fall as the stock closed 8.18% lower at Rs 3414.75 on slowdown concerns. The stock fell 9.18% intra-day.
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However, the banking stocks witnessed a sharp turn in investors' sentiments on Monday on account of Rs 3,800-crore fraud by Bhushan Power & Steel.
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