Bank stocks dip as RBI admits to potential balance sheet stress in sector

Uncertainty over asset quality remains challenge; a few stocks attractive from a medium term perspective, say analysts

The Reserve Bank of India (RBI’s) financial stability report (FSR) released last weekend, underlining the potential balance sheet stress for banks amid the Covid-19 crisis, impacted investor sentiment on Monday.

With a 3.6 per cent fall, the Nifty Bank index traded below its 200-day moving average. Not only did it underperform the leading market indices, but was also the biggest loser among sectoral indices. Banking stocks were the key reason for the Sensex falling 0.5 per cent on Monday. Th­o­ugh the asset quality stress was expected, the same being highlighted by the RBI was crucial.

Among other key developments over the weekend,