State Bank of India shares staged a comeback in early trade today after a six-session losing streak, surging by over 3 per cent on the BSE and NSE in tandem with a rally in the broader market.
SBI, which had dipped to a 52-week low level of Rs 1,708.55 on the BSE on October 5, surged 3.29 per cent to an early high of Rs 1,771.90. The scrip was later trading at Rs 1,762.20, up 2.73 per cent.
A similar movement was witnessed on the National Stock Exchange as well, where the stock opened on a bullish note and rallied by over 3.45 per cent to a high of Rs 1,777.85. It was later quoted at Rs 1,762.15, up 2.55 per cent.
SBI has been losing ground on the bourses over the past six trading sessions. It was badly hammered after global ratings firm Moody’s downgraded its rating of SBI’s financial strength on October 4.
The state-run bank has lost about Rs 8,000 crore in market capitalisation over the two trading sessions since October 4 and its market valuation stood at Rs 1,08,921 crore at the end of trade on October 5.
Moody’s downgraded the rating of SBI’s financial strength by one notch to ‘D+’ due to its low Tier-I capital ratio and deteriorating asset quality. Moody’s cited a likely rise in the bank’s non-performing assets in the near future as one of the reasons for the downgrade.
The State Bank of India Chairman, Mr Pradip Chaudhuri, has asked the Government to expeditiously approve the bank’s rights issue proposal to help it shore up capital by about Rs 20,000 crore.
The downgrade will make overseas borrowings costlier for the state-owned lender.