Bank stocks slump on margin worries; ICICI, SBI major losers

Banks have raised deposit rates by as much as 1.5 per cent, leading to investors -- already cautious after the recent bribery-for-home-loans racket -- steering clear of the sector.

ICICI Bank and SBI were top losers among blue-chip stocks, with the former plunging 3.50 per cent and the latter by 2.96 per cent. Both the scrips were the biggest turn-off for the broader market, as edgy investors abandoned bank stocks on margin worries.

ICICI Bank which finished last in the list of 30-best performing companies, fell 4.27 per cent to hit a low of Rs 1,101.35 in the intra-day session. Similarly, SBI tanked 3.48 per cent to touch an intra-day low of Rs 2,850. The bank has reported a fourth consecutive session fall. Yesterday, the lender had raised its deposit rates by up to 150 basis points, or 1.5 per cent, across various maturities.

"Rising deposit rates by various lenders have hammered investors confidence who earlier suffered a blow in the form of the loan bribery controversy. Investors have become nervous on fear of pressure on net interest margin that is the reason they are booking profits," Unicon Financial Solutions CEO Gajendra Nagpal said.

Besides, HDFC Bank, Kotak Mahindra Bank, Bank of India too suffered losses. HDFC Bank lost 1.39 per cent, Kotak Mahindra went down by 3.18 per cent. Similarly Bank of India too fell 4.42 per cent after the state-owned lender hiked fixed deposit rates by up to 1 per cent on select maturities.

Led by losses in these stocks, the entire banking sector suffered heavy selling pressure and was the biggest dampener for the Sensex. The BSE banking index closed at 13,339.43, a whopping loss of 393.33 points or 2.86 per cent.

Meanwhile, the BSE barometer Sensex ended the at 19,934.64, down by 46.67 points or 0.23 per cent.