Demonetisation impact: Banks’ share prices plunge; India Bank, IndusInd Bank, Axis Bank lead losers

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Mumbai | Published: December 23, 2016 6:14:42 AM

Stocks of leading listed banks fell anywhere between 0.23% and 23% in the calendar year 2016.

Stocks of leading listed banks fell anywhere between 0.23% and 23% in the calendar year 2016. The share price of state-owned IDBI Bank lost the most, at its lows during the year, down as much as 46.8%. The BSE Bankex dropped to three-month low and closed at 20,451.01, down by over 232.76. Since the government banned high-value currency notes on November 8, the bank index fell by about 8.5%.

India’s largest public sector lender, the State Bank of India (SBI), hit one-month low on Thursday to end at R249.75, down 2%, while the year-to-date change is up 11%. SBI on December 19 had proposed to raise R5,681 crore by issuance of preferential shares to the central government, the market reacted negatively to the decision and the stock fell further by 5%.

The stock of HDFC Bank, the country’s second-largest private sector bank by assets, was up by 8% in calendar year 2016 but fell to a six-month low on Thursday.

The stock reported a sharp decline of 12% from R1,391.35 after the demonetisation move to R1,225.75 on November 15.

Another private lender, Axis Bank, dropped to three-month low to R448.45, down by over 2%, even the year-to-date change is down by 0.23%. Overall in CY16, the stock created some crests and troughs but ended in flat. The stock hit R635.95, this year’s highest on September 6, and fell by over 29% since then.

The stock price of Punjab National Bank (PNB) hit three-month low and closed at R119.35, down by 1%, although the shares are notched up 3.2 in CY2016. In Q1FY17, PNB reported the largest quarterly loss by any domestic bank, although it performed a little better in Q2. However, the bank’s Q2 performance didn’t help it stock any better as post-demonetisation the stock plunged by 25%.

Demonetisation impacted the banking sector, the share price of banks of both public and private sectors banks has gone down significantly post the Centre’s November 8 move.

A Kotak report published on December 16 stated that “further slippages were to occur in H2FY17, especially in the SME segment as a result of demonetisation”.

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