Investors From Bank Shares Frontline Counters - Nov 06, 2008

The BSE Sensex was down 362.83 points, or 3.59%, to 9,757.18.State Bank of India (down 4.61% to Rs 1214.95), HDFC Bank (down 2.50% to Rs 1067.10), and ICICI Bank (down 3.41% to Rs 436.25), slipped among the frontline banking counters.

Among the mid-cap banking shares, Federal Bank (down 4.50% to Rs 141.20), Kotak Mahindra Bank (down 1.26% to Rs 422.85), Bank of India (down 5.57% to Rs 261), Bank of Baroda (down 2.80% to Rs 272.25), Punjab National Bank (down 1.69% to Rs 483.50) and Axis Bank (down 4.36% to Rs 577.50) edged lower.

The BSE Bankex outperformed the market over the past one month till 5 November 2008, declining 12.37% compared to the Sensex's declined of 19.21%. It had also underperformed the market in the past one quarter, declining 21.95% compared to Sensex's decline of 32.36%.

State-run banks have decided to cut lending rates after the central bank's liquidity boosting measures announced late last week. Bhatt said State Bank of India will announce a 75 basis point cut in its prime lending rate later today.

Corporation Bank has cut its benchmark prime-lending rate by 75 basis points to 13.25% with effect from 10 November 2008.

Bank of India announced the cut on its prime-lending rate by 75 basis points to 13.25% with effect from 6 November 2008. The bank also plans to cut the interest rates on deposits by 50 basis points across all maturities with effect from 1 December 2008, which will help reduce cost of funds.

Punjab National Bank (PNB) cut its benchmark prime-lending rate (BPLR) by 50 basis points to 13.50% with effect from 1 November 2008. The Bank also decided to reduce the peak rates of deposits from 10.5% to 10% with effect from 1 December 2008.

The Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its repo rate or main short-term lending rate by 50 basis points to 7.5% and banks' cash reserve ratio (CRR) by 100 basis points to 5.5%. The RBI also cut banks' statutory liquidity ratio (SLR) by 100 bps to 24% of their deposits with effect from 8 November 2008.