PSU banks down 'again'

PSU banks are trading down and are also pulling the markets down with themselves. BSE Bankex is down by almost 1 percent on an intra day basis on Monday even as BSE Sensex is trading flat.

State Bank of India (SBI) is down by two and half percent , Punjab National Bank is down by three percent , Indian Bank is down by 1 percent and Bank of Baroda is down by a whopping 7 percent on Monday on an intra day basis at the time of filing this report. Amongst the private sector banks ICICI Bank and Axis Bank are trading down by 1 percent each.

The PSU banks as a group are in news lately for all the wrong reasons. Many brokers are going bearish on the state owned banks  and there are various reports by foreign brokerages on the need for further capitalisation in the PSU banking stocks. Credit Suisse report suggests, on account of credit costs and losses due to provisioning, net worth for the PSU banks has been eroded significantly.

Market analysts are also discussing openly the increasing market share of the private banks at the expense of the state owned banks. HDFC & Yes Bank are emerging as the top gainers in terms of market share in the loan markets for the top corporates in India, as per HSBC report published in News Daily on Monday.

Poor asset quality , consolidation related volatility , wage revision expected in FY 17 as well as IFRS related stress are the key negative triggers for the PSU banks and these triggers are not allowing the banks to grow; and that is exactly what is getting reflected in the stock prices.

It is no wonder  then that the scrip like HDFC Bank remains a hot favourite amongst the investors including the foreign institutional investors.