Mumbai: Bank stocks on Friday witnessed a selling pressure after the Financial Stability Report said that asset quality deterioration is likely to continue for a few more quarters.
Shares of Kotak Mahindra Bank fell by 1.56 percent, PNB was down 1.56 percent, ICICI Bank lost 1.35 percent on the BSE.
Among others, Federal Bank slipped 1.31 percent, Yes Bank (0.93 percent), AXIS Bank (0.79 percent), Bank of Baroda (0.34 percent) and HDFC Bank (0.23 percent).
The BSE banking index fell by 0.74 percent to settle at 21,058.76.
"RBI's stress test results poured water on the banking sector which had been buoyant following capital infusion plans," said Anand James, Co Head Technical Research Desk, Geojit BNP Paribas.
Strong macroeconomic fundamentals offer India a "reasonable degree of resilience" to fight uncertainties, but poor asset quality of banks and managing expectations are key challenges for regulators and the government, says the Financial Stability Report.
Gross non-performing assets (NPAs) in the banking system have grown to 4.6 percent at the end of March this year from 4.5 percent in September 2014, while the stressed advances including standard restructured loans have risen to 11.1 percent from 10.7 percent, the six-monthly FSR released by the Reserve Bank said yesterday.
Stating that the rising NPA situation has not bottomed out, the report warned that asset quality deterioration is likely to continue for a few more quarters.
Meanwhile, in the broader market the BSE benchmark Sensex ended at 27,811.84, down 84.13 points.
