While the US Federal Reserve Chairman Ben Bernanke’s hint yesterday that there would be no rush to withdraw quantitative easing (QE) anytime soon cheered the markets, the sharp drop in the Indian rupee against the US dollar sent bank stocks on a downward course with five banks hitting fresh 52-week-lows in the NSE today.
The banking giant SBI, which today came close to breaching its 52-week-low touched only yesterday, was still hovering around the previous low, indicating the market’s fears that a weak rupee may restrict the RBI’s manoeuvrability in tinkering with interest rates.
In his prepared comments to the US Congress, Federal Reserve Chairman Ben Bernanke said the Federal Reserve’s asset purchases were by “no means on a pre-set course”. This was a welcome departure from the comments he had made a month earlier that the Federal Reserve would cut back on its monthly bond buying if the country’s economic outlook continued to improve. This then sent the global stock markets into a tailspin as it was presumed that the bond buying programme of the Federal Reserve may taper off sooner rather than later.
But this time, his remarks gave an indication that the US Fed would not be in a hurry to cut the bond buying programme that has kept the interest rates under leash. Bernanke's comments cheered the markets with the BSE Sensex gaining about 100 points to cross the 20,050-mark in the morning. But by noon, much of the Bernanke magic had waned and the Sensex was trading around 19,980 points, a gain of about 35 points, by 12.45 pm.
SBI, which hit a fresh 52-week-low of Rs 1,790.10 yesterday, came very close to breaching it when it fell to Rs 1,791 today. But it has managed to pull back and was trading at Rs 1,799.50, down by Rs 7.20.
Five bank stocks — four of them PSUs — dipped to new yearly lows. Allahabad Bank fell to a new yearly low of Rs 82.50 before the stock pulled back to Rs 84.25. Bank of India was another big bank to drop to a new yearly low, when the stock dropped to a new low of Rs 209.50 before making a mild recovery to Rs 211.65.
Two other relatively smaller PSUs to touch new yearly lows were Dena Bank and Punjab & Sind Bank. P&S Bank was trading at Rs 50.80, a new yearly low, around noon. Dena Bank fell to Rs 65, a new low before edging up to Rs 66.05.
The only private sector bank stock to hit a new low was Federal Bank, which touched a new low of Rs 362.20 though the stock managed to pull back to Rs 366.70.
Among the major banks in the private sector, only HDFC Bank that came out with a stellar Q1 show was in the green. The stock had gained Rs 3.15 to trade at Rs 666.05. But three of its rivals were in the red. Kotak Mahindra Bank was down by Rs 13 at Rs 698.40, Axis Bank lost Rs 26.70 to trade at Rs 1,167 and ICICI Bank breached the psychologically crucial Rs 1,000 price band to trade at Rs 956.55, a loss of Rs 23.70.