Banking shares extend fall; Uco Bank, Dena Bank, IOB hits 52-week low

ICICI Bank, Canara Bank, Federal Bank, Bank of Baroda, Axis Bank and Bank of India were down 1-3% on the NSE.

Banking shares are continue under pressure for the second straight day with the National Stock Exchange (NSE) Bank Nifty index fallen nearly three percentage points in two days.

At 1409 hours, Bank Nifty was down 1% at 18,614 points compared with 0.60% decline in the benchmark CNX Nifty. The banking share index has dipped 2.8% or 533 points in past two trading sessions from 19,147 on March 18, 2015.

Dena Bank (down 2.5% at Rs 50.45), Jammu and Kashmir Bank (2% at Rs 103), Uco Bank (1.4% at Rs 65.25) and Indian Overseas Bank (1% at Rs 42.90) have hit their respective 52-week low values during intra-day trade.

The banking sector for April-December 2014 (9MFY15), has given a mixed performance with private banks faring much better than public sector banks (PSBs). 9MFY15 witnessed a sharp jump in gross non- performing assets (GNPAs) for PSBs.

Analyst at Karvy Stock Broking expects this trend to continue for the next 1-2 quarters and PSBs are likely to face higher pressure as they have sizable restructured books.

In the post-election rally, all the stocks across the banking space witnessed a sharp appreciation in prices on expectations of an economic revival and in turn an improvement in the performance of the banks. We believe that an improving economy after a prolonged period of slowdown has led to buoyancy in the valuations for banks. However, only the banks which report an improved performance will continue to command higher multiples, analyst said in a research report dated March 16, 2015.

Meanwhile, among the other individual stocks, ICICI Bank has dipped 3% to Rs 322, followed by Canara Bank down 2% at Rs 384, while Federal Bank, Bank of Baroda, Axis Bank and Bank of India were trading lower 1% each.