Bank stocks plunge on rate hike fears

Financial stocks on Wednesday fell by 1-3 per cent on the BSE amid fears that the RBI will again hike interest rates on Thursday to tame a stubbornly high inflation, denting the rate sensitive sector's corporate loans outgo.

Among the banking sector giants, SBI shed 2.33 per cent to Rs 2,182 a piece, followed by largest private lender ICICI bank that dipped by 2.10 per cent to 1,033.05 a piece as investors took positions ahead of the RBI mid-quarterly review.

Private sector banks, Axis Bank shed 2.73 per cent and Yes Bank 1.25 per cent. "Apprehensions regarding RBI's monetary policy review scheduled for tomorrow led to the cautious stance being maintained by the investors on interest rate sensitive stocks," Bonanza Portfolio Senior Research analyst Shanu Goel said.

State-run Bank of Baroda fell 0.81 per cent, followed by Punjab National Bank and Bank of India that slipped by 0.46 per cent and 0.40 per cent, respectively.

The plunge in bank stocks led the 15-scrip BSE bankex fell by 1.58 per cent to 12,143.23. With inflation hovering much above the comfort zone, the market was routed by fears that the central bank may raise key policy rates in its first mid-quarterly review of the credit policy for FY12.

Among other rate sensitive sectors, realty and auto too witnessed selling pressure. Real estate developer DLF lost 2.80 per cent, while Indiabulls Real Estate slipped by 3.18 per cent.

Among the auto stocks, Maruti Suzuki dipped by 1.01 per cent, Mahindra & Mahindra 1.07 per cent and Ashok Leyland 0.59 per cent.
Meanwhile, the BSE crucial index Sensex on Wednesday plunged 176.42 points at 18,132.24.