Mumbai: Shares of entities interested in entering the banking space surged Monday, while stocks of many incumbent banks came under the selling pressure as RBI cleared the decks for entry of new players in the business.
Shares of entities from Reliance, Birlas, M&M and L&T groups surged as much as 9 percent following RBI's final guidelines to issue fresh banking licences.
On the other hand, stocks of lenders such as Allahabad Bank, Canara Bank, Bank of Baroda and HDFC Bank saw sell-offs.
Marketmen said the decline in bank stocks was largely because entry of new players will increase competition. The decline was also prompted by a host of mid-cap and mall-cap companies that crashed in the stock market.
More than a dozen corporates as well as state-owned firms such as PFC, LIC and India Post, are likely to apply to the Reserve Bank for licence for setting up banks.
The biggest early gainer was Religare, whose stock was up 8.75 percent on hopes of its entering the banking sector, followed by L&T Finance which ended the day with gains of 4.96 percent.
Bajaj Finserv settled with gains of 3.36 percent, Aditya Birla Nuvo - 0.91 percent, M&M Financials - 0.68 percent, IDFC - 0.58 percent and PFC - 0.49 percent).
Meanwhile, shares of IFCI, Indiabulls Financials and Reliance Capital could not sustain the gains and ended in the negative territory with losses of as much as 1.20 percent, 3.81 percent and 0.04 percent.
While announcing comprehensive guidelines for new bank licences on February 22, the Reserve Bank said interested entities can file their applications by July 1.
On the other hand, the biggest loser was Allahabad Bank, whose stock was down 1.66 percent, followed by Canara Bank - 1.60 percent and Bank of Baroda - 1.40 percent.
However, shares of State Bank of India settled in the positive territory and ended with gains of 1.11 percent on the BSE.
Among others losers, Vijaya Bank fell 0.37 percent, Punjab National Bank - 1.01 percent, Bank of India - 1.20 percent, Indian Overseas Bank - 1.27 percent.
Although ICICI Bank settled with marginal gain of 0.20 percent, HDFC Bank was down 0.59 percent on the BSE during the afternoon trade.
First Published: Monday, February 25, 2013, 20:09