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Banking Stocks Decline after Series of Probes into Banks

Dynamic Equities Pvt Ltd | 23 Dec, 2016  | Follow Author | Add to my Favourites 
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Intraday on Thursday, Shares of banking firms dipped, with BSE Bankex, Bank Nifty and NSE Nifty Private bank indices touching nearly a sixmonth low. The reason being the current series of investigations in various banks by the police and tax authorities have dampened the sentiments of investors.

Axis Bank- Axis Bank share price slipped 1.4%, declining for the fifth consecutive day.

Yes Bank- Yes Bank share price fell 1.5%.

Federal Bank- Federal Bank share price dipped marginally by 0.8%. Both Yes Bank and Federal Bank have been slipping for the seventh day.

HDFC Bank- HDFC Bank share price displayed a slight fall of 0.5%. This scrip gained only seven times in the last 29 days.

State Bank of India- Out of the five sessions, SBI share price went downwards in four sessions. As of now, SBI share price is trading lower at 2%.

ICICI Bank- ICICI bank share price declined 0.7%, it fell in six out of nine trading sessions.

Kotak Mahindra Bank- Kotak Bank share price dropped 1%, the stock fell in seven out of nine trading sessions.

BSE Bankex, Nifty Private Bank and Nifty PSU Bank indices depreciated nearly 1% each. All three indices fell four out of five trading sessions and hit a level last seen on 29 June.

Aftermath of Demonetization

It is believed that the profit margins of the banks may come under pressure for the coming few quarters on expected fall in credit growth driven by reduced credit demand from small and medium sized enterprises due to demonetization.

The loan growth in personal loan segment (auto, credit card and other personal loans) can also come under pressure since customers are delaying any additional expenses because of the shortage of cash on account of limit on withdrawals.

The banks are facing continued repayments due to demonetization which is also highlighted in sharp slowdown in systemic credit growth.

Further, an India Today report showed that how corrupt bank officials from some of the country’s leading lenders are diverting money supplies to tax thieves.

Unethical behavior by banks employees through helping people converting their black money into white post-demonetization has definitely weighed on sentiments. Any step implemented by the RBI and government in the days to come would correct the banks’ stocks especially for those who remain on top of list.

For the past few weeks, amid reports of suspicious ongoings at Axis Bank branches in the wake of demonetization, the ED - Enforcement Directorate and the tax department have visited 8 of the bank’s branches. The Enforcement Directorate, the tax department and the bank itself are reviewing fifty accounts. In the same period, the ED arrested a few Axis Bank employees. Axis Bank has already suspended twenty four of its employees and appointed KPMG to conduct an audit of dubious transactions.

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About Dynamic Equities Pvt Ltd

Dynamic Equities Pvt. Ltd. is a a SEBI Registered Investment Advisor and Stock Broker, a leading financial services provider, and one of the major players in the Equity markets in India. With an experience of over 15+ years in Stock Markets and Equity Research, they provide daily updated Support & Resistance of 4200 instruments across 93 exchanges and 56 countries globally. They have an in-house team of over 25 analysts. Under the guidance and mentorship of Mr. Shailesh Saraf, MD of Dynamic Equities Pvt. Ltd., these analysts are dedicately involved in guiding their clients and users of the website for trading in the market. Mr. Shailesh Saraf has an experience of over 24 years in the financial market, especially in capital & derivatives market operations, trading, research and management related areas. Dynamic Levels is a website owned by Dynamic Equities Pvt. Ltd. The website can be reached at

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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