Will private banks extend their fall today?

On Tuesday, giants in the private banking space cracked between 4 and 10%

A single day erosion of nearly 10% in private banks' counters on the stock exchanges is relatively a rare event. But when it happens, it's a strong indication that markets may be heading for further low levels and whatever fall has been witnessed so far could just be a tip of the iceberg.

On Tuesday, stocks of private banking giants like Axis Bank, ICICI Bank, HDFC Bank, YES Bank and Kotak Bank cracked between 4 and 10%. The BSE's Bankex closed 5.06% down or 526 points. In the last hour of trading, selling had intensified.

According to market observers, another 10-15% fall in private banks may not be ruled out in next few trading sessions.

HDFC Bank, one of the most steady financial stocks, is struggling to reach levels of Rs 600 while counters of ICICI Bank and Axis Bank failed to float over Rs 800 mark.

The kind of fate their state-owned peers met over the last several weeks has shaken investors' confidence in the banking sector. Private banks appear not to be aloof from uncertainties.

Traders are keeping their fingers crossed. Many are expecting that carnage in private banks may continue for next few sessions. According to them, there can be another 10-15% fall in private bank counters. Yesterday, though European indices closed in the red, what could give respite is the positive closing of US stock markets.

For instance, in HDFC Bank, traders see levels of Rs 500-520 in the offing while for ICICI Bank and Axis Bank they see further decline of Rs 100 each.

Such expectations from traders'  have parallels with the fall recorded by mighty public sector banks. The shares got butchered in the last few months. And experts seem to be unanimous that these counters will fall further.

Stocks of India's largest lender State Bank of India (SBI) have already seen an erosion of over Rs 1,000 in last few months. It closed on Tuesday at Rs 1,475.65. Similarly, shares of Punjab National Bank (PNB) had a free fall from above Rs 900 level and are currently trading at less than half at Rs 409. Another victim is Bank of Baroda (BoB) which fell almost in line with PNB from Rs 900 to Rs 460.