Banks stocks tumble on surging bond yields

Shares of 14 banks fell by 1.67% to 7.93% at 14:42 IST on BSE as yields on government bonds surged.

Yes Bank (down 7.93%), Bank of Baroda (down 7.53%), Canara Bank (down 7.32%), Axis Bank (down 6.20%), Bank of India (down 6.14%), ICICI Bank (down 5.35%), Punjab National Bank (down 5.03%), Federal Bank (down 4.84%), IndusInd Bank (down 4.10%), Union Bank of India (down 3.87%), IDBI Bank (down 2.79%), State Bank of India (down 2.62%), Kotak Mahindra Bank (down 2.41%) and HDFC Bank (down 1.67%), edged lower.

The S&P BSE Bankex was down 3.70% at 10,401.03. It underperformed the S&P BSE Sensex, which was down 2.13% at 18,201.68.

The Bankex had underperformed the market over the past one month till 16 August 2013, sliding 15.76% compared with the Sensex's 6.31% decline. The index had also underperformed the market in past one quarter, falling 28.61% as against Sensex's 8.15% fall.

India's benchmark 10-year government bond yield surged today, 19 August 2013, as the rupee extended recent losses.

The benchmark 10-year bond yield was trading at 9.08%. The partially convertible rupee was trading at 62.69 per dollar, after hitting a record low of 62.82 per dollar earlier today.

Lower bond prices will result in diminution in value of bond holdings by banks. Bond yields and bond prices are inversely related.

Powered by Capital Market - Live News