Bank Shares Snap 2-Day Rise Amid Profit Booking, Bond Yield Surge; Sectoral Index Down 2%
The Bank Nifty experienced a significant downturn on Friday, reversing a two-day gaining streak as profit booking and a surge in bond yields triggered a 2 percent decline. The index, which had previously risen 4.37 percent over the past two sessions, saw selling pressure throughout the day.All fourteen constituents of the Nifty Bank index were trading in the red. Canara Bank led the decline, falling up to 4 percent. Bank of Baroda decreased by 3.78 percent, while Punjab National Bank declined by 3.29 percent. HDFC Bank reversed its two-day gains, falling more than 2 percent.
The decline in HDFC Bank followed reports, citing sources from the Financial Times, regarding differences between former chairman Atanu Chakraborty and chief executive Sashidhar Jagdishan. Chakraborty reportedly opposed extending Jagdishan’s tenure, while the board favored it. The stock had previously fallen approximately 12 percent after Chakraborty’s resignation. His resignation letter cited “certain happenings and practices within the bank” that were “not in congruence” with his personal values and ethics.
State-owned lenders contributed significantly to the sector’s decline, driven by concerns about rising crude prices and their potential impact on borrowing costs and bond yields. Higher bond yields typically reduce the value of banks’ bond holdings, potentially impacting treasury portfolio gains.
| Nifty Bank Constituents | Change in Value |
|---|---|
| Canara Bank | -4.00% |
| Bank of Baroda | -3.78% |
| Punjab National Bank | -3.29% |
| HDFC Bank | -2.00% |
| ICICI Bank | -1.87% |
| Axis Bank | -1.63% |
| State Bank of India | -1.55% |
| Kotak Mahindra Bank | -1.45% |
| IndusInd Bank | -2.00% |
| AU Small Finance Bank | -1.98% |
| Federal Bank | -1.88% |
| IDFC First Bank | -1.87% |
| Bajaj Finance | -1.77% |
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