After a day's gain, banking and financial institution stocks once again resumed their downward journey on Thursday. Beginning September 25 to October 13, bears pulled down the countries premier banking and institutional stocks to their new lows almost every day. The worst hit have been SBI, IDBI and ICICI who have seen anerosion of Rs 2,915 crore, Rs 1,056 crore and Rs 737 crore, respectively.

Though the bear run has covered the entire banking and financial sector, the focus of the bears appears to have been on the leaders in the segment. However, the rleatively smaller and weaker banks have not been spared.This kind of attack is somewhat similar to the way the market treated the non-banking finance companies of the country. In the process a veiled attempt has been made to strike at the route of the financial system by running down the stocks of the country's premier institutions, who are backed by strong fundamentals. Besides, in most of them the government holds a majority stake.

These institutions have fallen victims to the US-64 scare on the stock markets. Most of them have been reduced to values which are unimaginable for the kind of position that they hold in the country's economy. Hidden non-performing assets is touted as the reason for the run down of the banking and financial institutions' stocks.

The bears aretrying to create a CRB-type scare for the entire banking and financial sector. CRB led to a run on NBFCs and their share prices taking a plunge from where they have not recovered. It is unimaginable that the US-64 scare can drive depositors out of the banking system. But surely, an attempt has been made to drive investors out of the banking stocks. And, enough amunition for the bears seems to have been provided by the foreign institutional investors who have pulled out $ 78 million or Rs 333 crore in five days (October 5 to 9).

The banking and financial institutions did not see the kind of crisis on the bourses even in the worst days after the nuclear blast. The following events including the sanctions, the downgrading of the sovereign rating and the rupee crash, did not have the kind of impact on these stocks that was witnessed during the 9-day period.

In most of these banks and institutions, FIIs have a substantially large holding. This is especially so in the case of State Bank of India and CorporationBank.