The cancellation of 214 coal blocks by the Supreme Court resulted in banking scrips taking a beating on the bourses, with public sector lenders leading the pack.
“Banks with significant exposure to the power and metals sectors have been the worst hit,” said Dinesh Shukla, a banking analyst at brokerage firm Sharekhan.
The Bank Nifty lost 1.02 per cent with an advance decline ratio of 2:10 and ended Wednesday at 15,740, down 163 points. The CNX PSU Bank index lost 3.11 per cent to close at 3,482, with an advance decline ratio of 0:12.
Arundhati Bhattacharya, Chairman, State Bank of India (SBI), said in a statement: “We believe uncertainty is possibly the worst enemy of growth. We are glad that this is over with the Supreme Court verdict on coal blocks allocation. We now look forward for a quick plan of action for ensuring that coal supplies are not disrupted and thereafter a swift and transparent bidding process for reallocation.”
Bank of India, Allahabad Bank, IDBI Bank, Canara Bank and Punjab National Bank were the top five losers in percentage terms among public sector lenders.
“The de-allocation of coal blocks will impact the commercials of some projects, but does not necessarily put the entire exposure of the banking sector towards these blocks at risk,” said a banking analyst at a multinational brokerage.
“The worst scenario would mean ₹73,000 crore (or 1.2 per cent of gross advances) can come under risk. The fact that only 40 of these 200-plus blocks are operational restricts the impact on the banking sector to less than ₹35,000 crore.”
SBI saw significant price volume action on the NSE and BSE on Wednesday. It closed at ₹2,476 on the NSE, down 3.14 per cent. On the BSE, the scrip was down 2.68 per cent at ₹2487.4.
Interestingly, Coal India was the biggest gainer in the Nifty and the Sensex, gaining 4.88 per cent on the NSE and 5.02 per cent on the BSE. It closed at ₹351.5 per share and ₹351.35 per share, respectively.