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Banking Stocks Declines: In 2022, the shares of the banking sector gave tremendous returns to the investors. Be it the Nifty Bank Index or the PSU Bank Index of Nifty, there was a great boom in both. Especially due to the rise in the shares of public sector banks, there was a tremendous jump in the PSU Bank Index. In 2022, the Nifty PSU Bank Index gave a return of 60 per cent. So many stocks of this index gave multibagger returns to the investors.
Nifty PSU Bank index fell 20 percent
But 2023 banking sector stocks have disappointed investors. And ever since Hindenburg’s research report against Adani group has come, since then the decline in public sector banks is not taking the name of stopping. The Nifty PSU Bank index has come down 20 per cent from its high since the Hindenburg report came out. On 24 January 2023, the Hindenburg report regarding the Adani group came out. Since then, the stocks of public sector banks have declined by 20 to 25 percent.
SBI stock fell heavily
Most of the questions are being raised regarding the loan given by the country’s largest bank SBI to the Adani group. Before the arrival of the report, SBI’s stock was trading at Rs 604, which fell by 18 percent to Rs 499, which is now trading at Rs 523. SBI’s exposure to the Adani group is Rs 27,000 crore, which is only 0.8 to 0.9 per cent of its total loan book.
Exposure to Adani group worries the market
Since Hindenburg’s report came, PNB’s stock has come down by 15 per cent and Bank of Baroda’s stock has come down by 12 per cent. Bank of Baroda has a loan of Rs 5500 crore on Adani group and Punjab National Bank has a loan of Rs 7000 crore. If the big banks were beaten up, how would the small government banks survive? Stocks of small public sector banks also fell by 20 to 25 percent.
Private banks are also under wraps
Not only public sector banks, but also the share of private sector IndusInd Bank, which has exposure to the Adani group, has seen a major decline. IndusInd Bank said that Adani group has 0.49 per cent exposure of its total loan bank. Since then, the stock of IndusInd Bank has also seen a decline. Before the arrival of Hindenburg’s report, the stock was at Rs 1220, which is now trading around Rs 1100. That is, 10 percent of the stocks have declined.
Pressure on banks to increase interest rates on deposits
It is not that only because of the Hindenburg report, bank stocks have broken. In the last few quarters, there has been a tremendous increase in the net interest margin of banks. But debt is getting costlier. So banks have to increase the interest rates on deposits. Rather, to meet the increasing demand for loans, attractive interest has to be offered on deposits. In such a situation, questions are being raised about whether the Net Interest Margin will remain excellent in the coming times. Due to this also there is pressure on banking stocks.
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