Bankex falls 1.48% as RBI tightens norms on consumer loans

Published - November 17, 2023 07:23 pm IST - MUMBAI

FILE PHOTO: FILE PHOTO: A Reserve Bank of India (RBI) logo is seen inside its headquarters in Mumbai, India, April 6, 2023. REUTERS/Francis Mascarenhas//o/File Photo/File Photo

FILE PHOTO: FILE PHOTO: A Reserve Bank of India (RBI) logo is seen inside its headquarters in Mumbai, India, April 6, 2023. REUTERS/Francis Mascarenhas//o/File Photo/File Photo | Photo Credit: FRANCIS MASCARENHAS

Banking company stocks on Friday came under selling pressure at the stock exchanges, a day after the Reserve Bank of India (RBI) increased risk weight on consumer loans from banks and NBFCs by 25 percentage points to curb a build-up in unsecured loan books.

Reacting to the RBI circular which will now make it mandatory for regulated entities to set aside higher capital for unsecured loans, the Bankex of the BSE fell 740.92 points or 1.48% to 49,170.81.

State Bank of India led the fall with a drop of 3.64%, followed by Axis Bank and Canara Bank which fell 3.03% and 2.02% respectively. ICICI Bank was down 1.45%, Federal Bank down 1.40%, Bank of Baroda down 0.91%, Kotak Bank down 0.43%, HDFC Bank down 0.22% and IndusInd Bank fell 0.09%.

Similarly, the Nifty Bank index of the National Stock Exchange fell 577.60 points, or 1.31%, to 43,583.95.

Kunal Shah, Senior Technical & Derivative analyst, LKP Securities said, “Following the RBI’s announcement of tightening provisions for consumer loans, the Bank Nifty opened with a gap down and sustained below the 44,000 mark. The index’s next support is situated at the 43,300-43,250 zone, serving as a crucial line of defense for the bulls.”

“If this level holds, it could pave the way for a potential recovery towards the 44,000 mark. However, a breach of the mentioned support may intensify selling pressure, leading the index further down towards the 42,700 level on the downside,” he added.

During the day the broader S&P BSE Sensex 50 index fell 187.75 points, or 0.28%, while the NSE Nifty 50 index was down 33.40 points or 0.17%.

Commenting on the overall market movement Avdhut Bagkar, Technical and Derivatives Analyst, StoxBox said, “Major Indian indices opened lower and remained rangebound after the RBI tightened consumer lending rules....”

“Heavyweight financial stocks saw a drop amid concerns over the sector’s loan growth and profitability after the RBI tightened rules for personal loans and credit cards. Six out of thirteen sectors ended in the red with banking, financial services, and oil & gas sector stocks falling the most,” he added.

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