State Bank of India (SBI) on Tuesday fell to the lowest in more than two years on the BSE after ratings firm Moody’s downgraded the bank’s financial strength by one notch to ‘D+’ on account of the lender’s low Tier-I capital ratio and deteriorating asset quality.

The stock, which had a weak start, settled 4.08 per cent lower at Rs 1,786.70 on the BSE, its lowest close since September 4, 2009. During the day, the stock dropped to its two—year low level of Rs 1,751.35, down 5.98 per cent from its previous close.

Similar was the trend at the National Stock Exchange where the stock tanked 3.63 per cent to close at Rs 1,794.05.

“SBI’s downgrade impacted the investors’ sentiment as the market declined after the news. Also, the downgrade had a wide impact on the financial stocks,” Motilal Oswal Securities Associate VP Analyst Technical Equities Mr Parag Doctor said.

Moody’s today downgraded its rating of SBI financial strength by one notch to ‘D+’ on account of the lender’s low Tier—I capital ratio and deteriorating asset quality.

“Moody’s Investors Service has downgraded the State Bank of India’s bank financial strength rating (BFSR), or standalone rating, to ‘D+’ from ‘C—’,” the agency said in a statement.

As per Moody’s, a ‘D’ rating suggest “modest intrinsic financial strength, potentially requiring some outside support at times”, while a ‘C’ rating denotes “adequate intrinsic financial strength“.

Following SBI’s downgrade, weakness was also seen at the counters of other leading financial companies as well, with ICICI Bank closing with a loss of 4.59 per cent and HDFC Bank falling by 1.78 per cent.

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