Bank stocks tank up to 6% amid govt plans for higher borrowing
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Bank stocks tank up to 6% amid govt plans for higher borrowing

Last Updated: Thursday, February 28, 2013, 22:12
 
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Bank stocks tank up to 6% amid govt plans for higher borrowing
Mumbai: Financial stocks on Thursday slumped by as much as 6 percent on liquidity concerns in banking system after the government put its gross market borrowings target at Rs 6.29 lakh crore for the 2013-14 fiscal.

The amount is Rs 70,000 crore, or 12.5 percent, higher than the borrowings in the current fiscal ending next month, and is likely to impact profitability of banks, analysts said.

SBI scrip plunged 5.80 percent to Rs 2,085.40, while PNB tanked 5.79 percent to Rs 787.90 on the BSE.

Union Bank was down 5.50 percent, Bank of India - 5.38 percent, BoB - 4.48 percent, Canara Bank - 4.28 percent, ICICI Bank - 3.86 percent, IDBI Bank - 5.89 percent and Axis Bank - 3.96 percent.

The BSE Banking index slipped 3.59 percent to 13,203.87.

In the Union Budget 2013-14, presented by Finance Minister P Chidambaram in Parliament Thursday, the government's market borrowings are pegged at Rs 6.29 lakh crore, higher than Rs 5.59 lakh crore in FY'13.

"Indian economy is still going through a stress period and rate cuts are not happening. It means that there is definitely a liquidity shortage. If the government is going to raise market borrowings, liquidity will be impacted further," said Kishor Ostwal, CMD of CNI Research.

"It will also impact the profitability of banks," he added.

In the worst Budget day show since 2009, the BSE 30-stock index, Sensex, tanked 291 points to end below 19,000-level, as the government slapped more taxes on companies as well as super-rich and offered little concessions for large investors.

Sensex closed at 18,861.54, down 290.87 points or 1.52 percent. This is the lowest close since 18,842.08 on November 27, 2012.

PTI


First Published: Thursday, February 28, 2013, 22:12


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