Nifty PSU Bank index slips 5%, sees sharpest one-day fall in 11 months

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Shares of public sector banks (PSBs) came under pressure on Tuesday, with the Nifty PSU Bank index slipping 5 per cent on the National Stock Exchange (NSE) and recording its sharpest single-day decline in 11 months. In comparison, the Nifty 50 ended 0.33 per cent lower at 24,379.60. 

 

Earlier, on June 4, 2024, on Lok Sabha election results day, the Nifty PSU Bank index tanked 15 per cent in a single day.

 

The sharp decline in PSBs on Tuesday came after Bank of Baroda (BoB) reported 6.6 per cent year-on-year (Y-o-Y) fall in net interest income (NII) for the March quarter (Q4FY25) at ~11,020 crore, which was much below estimates.  

 

Analysts at Motilal Oswal Financial Services (MOFSL), for instance, had expected BoB to report NII growth at ~11,660 crore (1 per cent Y-o-Y decline). The state-owned bank’s net profit, meanwhile, increased by 3.3 per cent Y-o-Y at ~5,048 crore, aided by a 24.3 per cent Y-o-Y jump in non-interest income. 

 

“The Nifty PSU Bank index tanked as weak numbers from BoB led to selling pressure. Market volatility was further aggravated by escalating geopolitical tensions between India and Pakistan, coupled with uncertainty surrounding the US Federal Reserve’s upcoming interest rate decision," said Siddhartha Khemka, Head - Research and Wealth Management at MOFSL.

 

The Nifty PSU Bank index was the top loser among sectoral indices that ended 4.8 per cent lower at 6,235.20 levels on the NSE. BoB was the top loser among PSU banks that lost 11 per cent.

 

Meanwhile, benchmark indices Sensex and Nifty ended lower in a range-bound trade on Tuesday due to profit booking, mainly in banking and oil shares, and investors staying on the sideline amid escalating tensions between India and Pakistan. The Nifty Midcap 100 and the Nifty Smallcap 100 indices fell over 2.3 per cent each. The overall market breadth was weak, with only 779 stocks advancing on the BSE and 3,167 declining.