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ICICI Bank, Axis Bank slide over 2% as oil, geopolitics weigh
The selloff coincided with early declines in the Sensex and Nifty, as rising crude prices and US-Iran hostilities kept risk appetite subdued.
Shares of ICICI Bank and Axis Bank fell more than 2% each on the NSE in Tuesday trading, while HDFC Bank declined around 1%. Other banking stocks, including Kotak Mahindra Bank, also traded lower amid weak sentiment across Dalal Street, according to LiveMint Markets.
The broader market opened lower, with the 30-share BSE Sensex down 382.25 points to 75,750.56 in early trade, and the 50-share NSE Nifty down 97.80 points to 23,681.80. LiveMint Markets attributed the move to rising crude oil prices and continued hostilities between the US and Iran, factors that pressured investor risk appetite.
Seema Srivastava, Senior Research Analyst at SMC Global Securities, said the drop in private banking stocks is linked to tightening liquidity, global macro headwinds, and structural margin pressure. She pointed to Brent crude near $95 to $97 per barrel, which she said has reignited domestic inflation fears and contributed to spikes in Indian sovereign bond yields.
Srivastava added that higher yields can pressure bond prices, creating mark-to-market losses for banks that hold large government securities portfolios, and that FIIs have been pulling capital from rate-sensitive emerging market assets. She also said banks are dealing with net interest margin compression as loan yields reprice downward after prior RBI adjustments while deposit costs remain elevated, with recent earnings growth supported more by lower credit provisioning than by net interest income expansion.
Latest closeWTI crude $90.70 ▲0.5%|Brent $95.32 ▲0.7%|Sensex 76,944.28 ▼0.0%