Shares of public sector banks continued to slide on Tuesday and lost Rs30,314 crore in market capitalisation in the last two sessions. The share prices of public sector banks fell anywhere between 5% and 17.8% in the past two sessions. The share price of State Bank of India, the country’s biggest lender, fell by 6.2% contributing half of the market cap loss of public sector banks.
Bank of India’s shares fell the most by 17.8% in the last two sessions. Bank of India had reported a loss Rs1,046 crore for the quarter ended March 2017. Bank of India had posted a profit in quarters ended September and December 2016, after posting losses in the previous four quarters. Slippages doubled on a quarter-on-quarter basis to Rs6,915 crore in March quarter and slippages for the entire fiscal stood at Rs20,321 crore.
Market participants attributed the fall in share prices to the inability of the public sector banks to contain their bad loans which has delayed their turnaround.
The share price of Vijaya Bank fell by 10.5%, the stock of Allahabad Bank and United Bank fell by over 8% in the last two sessions.
Shares of Central Bank and IDBI Bank whose loss widened in FY17 fell by more than 5%. The Nifty PSU Bank index fell by 5.9% in the past two sessions and Bank Nifty fell by 0.82%.
Market participants said the next couple of quarters will be bad for PSU banks and the recovery process will start as government and RBI are moving in tandem to resolve the NPA crisis.
PSU banks have outperformed the broader Nifty this year, from the beginning of the year till date, the Nifty PSU Bank index rose by 19% against Nifty’s rise of 14.7 %.