Nifty Bank tanks over 4% on renewed lockdown, SC verdict hit concerns

Investors off-loaded banking stocks on the bourses on Monday as record Covid-19 cases stirred fears of virus-induced restrictions across the country. Consequently, market participants panicked on concerns that derailment of economic activity may spark fresh round of non-performing assets' (NPAs') pile up.

In the intra-day deals, the Nifty Bank index tumbled 1,493 points, or 4.4 per cent, to hit a low of 32,365 levels while the Nifty Private Bank and PSU Bank indices slipped 4.4 per cent and 5 per cent, respectively. In comparison, the benchmark Nifty50 index dropped over 300 points, or 2.2 per cent, to 14,535 levels by 10:50 am.

Among individual stocks, IndusInd Bank plunged 6 per cent, while IDFC First Bank, SBI, Federal Bank, Bandhan Bank, and RBL Bank declined in the range of 4.6 per cent and 5 per cent. Shares of ICICI Bank, Axis Bank, PNB, HDFC Bank, and AU Small Finance Bank, meanwhile, slipped up to 4 per cent.

The fall in the public sector space was even more severe. Canara Bank, Bank of Baroda, Indian Overseas Bank, Bank of India, UCO Bank, Union Bank of India, and Central Bank of India skided in the range of 3 per cent to 6 per cent.

India recorded an all-time high of 1,03,558 coronavirus infections in a day on Sunday, pushing the nationwide Covid-19 tally to 1,25,89,067, according to the Union Health Ministry data.

The single-day rise in cases surpassed the earlier peak of 97,894 infections reported on September 17, last year, making it the highest since the pandemic began in India, while the death toll increased to 1,65,101 with 478 new fatalities.

Of the total new cases, nearly 50 per cent were reported in Maharashtra. Against this backdrop, Maharshtra government announced a lockdown in the state over the weekends to contain the fresh wave of coronavirus infections. Along with that, the Maharashtra government will also enforce a strict night curfew daily. During this period only essential services will be permitted. 

"The fast-rising Covid cases is a cause of concern. Restriction of economic activity in many areas might impact growth recovery," points out V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

India's factory activity grew at its weakest pace in seven months in March as renewed lockdowns to curtail a resurgence in Covid-19 cases dampened domestic demand and output, a private survey showed, forcing firms to cut headcount again. Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, declined to a seven-month low of 55.4 last month from February's 57.5, but remained above the 50-level separating growth from contraction for an eighth straight month. READ ABOUT IT HERE

Last week, the Indian government advised federal states to try and control the rapid spread of the virus. Tighter restrictions on activity suggest factories could be in for a tough April.

SC verdict woes

In another development, public sector banks may have to bear a burden of Rs 1,800-2,000 crore arising due to a recent Supreme Court judgement on the waiver of compound interest on all loan accounts which opted for moratorium during March-August 2020, a PTI report said.

The judgement covers loans above Rs 2 crore as loans below this got blanket interest on interest waiver in November last year. Compound interest support scheme for loan moratorium cost the government Rs 5,500 crore during 2020-21 and the scheme covered all borrowers including the prompt one who did not avail moratorium. READ HERE