Yes Bank (down 2.61%), IDBI Bank (down 2.08%), ICICI Bank (down 1.56%), State Bank of India (down 0.72%), Allahabad Bank (down 1.47%), Andhra Bank (down 1.79%), Canara Bank (down 1.94%), Vijaya Bank (down 2.19%), and Bank of India (down 3.58%), slipped.
The BSE Bankex was down 0.81% at 10,347.65. It underperformed the BSE Sensex which declined 0.81% to 17,439.10
Banking stocks being interest rate sensitive dropped on worries rise in interest rates will dampen demand for borrowed funds. The central bank's move to hike key policy rates before its 20 April 2010 policy review caught markets by surprise.
The Reserve Bank of India (RBI) after market hours on Friday 19 March 2010 unexpectedly raised interest rates from record-low levels, citing intensifying inflationary pressures and a steady economic recovery.
The RBI raised the repo rate, the rate at which it lends to banks to 5% from 4.75% and reverse repo rate, the rate which it absorbs funds from the system to 3.50% from 3.25% with immediate effect.
India's wholesale price index accelerated to 9.89% in February 2010, the highest since October 2008 and well above the central bank's end-March 2010 projection of 8.5% and January 2010 rise of 8.56%.