Most sectors in the Indian share markets have been drowning in a sea of red due to the crash led by coronavirus outbreak. The biggest blow, however, has been felt by the banking sector.

The sector was already reeling under pressure due multiple factors for quite some time. And things started getting worse since the start of 2020.

Here's a timeline showing some major events that happened in the Indian banking sector and led to the slowdown we are witnessing in the past few months...

1. Mounting Pile of Bad Loans: Indian banks have for years worked to beat down mounting piles of bad loans of the sort that led to the Yes Bank fallout. The ratio of gross non-performing assets (NPAs) at Indian banks rose to 11% in 2018 from about 2% in 2008, before starting to ease off.
2. IL&FS Crisis Kicks Off the Downward Spiral: Foreign institutional investors (FIIs) were heavily positioned in the Indian banking and financial space, and stocks in the sector witnessed maximum inflows during good times. However, they started noticing cracks with consistent negative performance in the banking and financial sector and started moving out of them. The downward spiral for these sectors began since IL&FS crisis camec out into the open.
3. Credit Quality Deteriorates: After being the most preferred sector for over half a decade, things started changing for stocks in the banking sector since 2020. This came as the sector witnessed a double blow in the form of YES Bank fallout and prolonged economic slowdown. And all this only led to credit quality deterioration for banks.
4. YES Bank Crash: The Yes Bank crisis and the sight of Rana Kapoor being taken to court in early March came in as one of the worst months for India's banking sector.
5. Bailout for Yes Bank: To save Yes Bank, a range of Indian lenders led by the State Bank of India (SBI), infused funds in return for an equity stake. The episode came as a jolt to investors, who worried it could exacerbate vulnerabilities in the financial system.
6. Panic Selling Amid SC Order: Then came another blow. Before the dust settled on Yes Bank, the Supreme Court ruled that telecom operators must pay dues worth billions owed to the government. This caused panic-selling in bank stocks due to their heavy exposure to the telecoms sector.
7. Coronavirus Threat: The challenges now facing India's banking sector have reached another order of magnitude due to the coronavirus threat to the economy. Banking stocks have been among the hardest hit.
8. Sharp Fall for BSE Bankex: The BSE Bankex has fallen about 46% so far this year, outpacing the 32% fall in the BSE Sensex. Shares of Axis Bank and IndusInd Bank have lost the most during this period.
9. Relief Measures: Owing to all these shocks, banks have sought various relief measures. On 27 March 2020, the Reserve Bank of India (RBI) came out all guns blazing to arrest a potential slowdown caused by coronavirus (Covid-19). It did not just lower the cash reserve ratio (CRR) by 1% to 3% but also cut the repo rate by 0.75%. Also, there is a three-month moratorium on payment of loan installments.
10. PSB Merger: Then came the major announcement effective from 1 April 2020. First announced in August 2019, the government's ambitious plan to merge 10 state-owned banks into four came into effect from 1 April 2020. The move, aimed at strengthening the banking system and creating more large institutions with size and scale, has seen...
    • Oriental Bank of Commerce and United Bank of India merged into Punjab National Bank,
    • Andhra Bank and Corporation Bank merged into Union Bank of India,
    • Allahabad Bank merged with Indian Bank, and
    • Syndicate Bank amalgamated into Canara Bank

So, that were some top pointers on what the Indian banking sector has been going through amid the coronavirus led stock market crash.

I reached out to Tanushree Banerjee, who is closely tracking the banking sector in the current scenario. Here's her view on the sector...

• The Covid-19 lockdown has hit cash flows of both individual borrowers and corporates. This, in turn, will impact their loan repayment capability.
  
  The RBI's repo rate cut came as a temporary lifeline for Indian companies with debt on books. It will offer both companies and retail borrowers some breather. If banks use this phase judiciously, it may save the NPA ratios from worsening significantly.
  
  However, only the banks that have adequate capital and provisioning cushion may be able to tide over the economic crisis. Eventually, another round of consolidation in private sector banks, like the one after 2002, cannot be ruled out.

Tanushree's latest StockSelect recommendation is one such midcap bank.

You can read the entire report here (requires subscription).

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The oil market plunged further on Tuesday on concerns over a collapse in demand as the pandemic leaves factories, cars and airplanes idled around the world. The extreme volatility in energy markets highlights investors' worries about the duration of the Coronavirus outbreak and its impact on the economy.

That is in turn weighing on financial markets more broadly, including stocks. The benchmark US oil contract was down $4.78 at just $15.65 per barrel on Tuesday, having traded as low as $11.79 a barrel at one point. The drop comes a day after the price of oil fell below zero on Monday, partly due to technical factors as traders shifted from one futures contract to another. The US oil contract for delivery in May settled at -$37.63 per barrel on Monday, an indication that investors don't want to be left holding oil at a time when storage facilities are almost full and demand is at its lowest since the mid-1990s. The tumult in the oil market reflects uncertainty over where the world economy will head as governments begin to loosen controls imposed to contain the coronavirus.

"We could merely be in the eye of the hurricane as the epicenters of its rage remain centered around demand devastation and crude oil oversupply," Stephen Innes of AxiCorp. said in a commentary. "At a minimum, oil prices will be the last asset class to recover from lockdown" and only when travel restrictions are lifted, he said. Brent crude, the international standard, dropped $45.72 to $19.85. "The historic drop in WTI prices is an indication of the downward pressure which many other crude oil grades could face, given the oversupply situation," Sushant Gupta of Wood Mackenzie said. The volatility in energy markets unsettled stock markets as well. with Germany's DAX stock index losing 3.3% to 10,319 and the CAC 40 in France shedding 3.2% to 4,384. Britain's FTSE 100 declined 2.6% to 5,664.

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BANK OF MAHARASHTRA share price has zoomed 9% and is presently trading at Rs 10.

Meanwhile, the BSE BANKEX Index is at 22,787 (up 2.1%).

Among the top Gainers in the BSE BANKEX Index today is BANK OF MAHARASHTRA (up 8.6%).

Over the last one year, BANK OF MAHARASHTRA has moved down from Rs 15 to Rs 10, registering a loss of Rs 5 (down 35.9%).

On the other hand, the BSE BANKEX has moved down from 32,704 to 22,787, loss of 9,917 points (down 30.4%) during the last 12 months.

The top gainers among the BSE BANKEX Index stocks during this same period were [param_historic_top3].

What About the Benchmark Indices?

The BSE Sensex is at 32,089 (up 1.8%).

The top gainers among the BSE Sensex stocks today are HUL (up 3.0%), INDUSIND BANK (up 2.9%) and BAJAJ FINANCE (up 2.8%). Other gainers include AXIS BANK (up 2.7%) and RELIANCE IND. (up 2.5%). The most traded stocks in the BSE Sensex are RELIANCE IND. and SBI.

In the meantime, NSE Nifty is at 9,383 (up 1.5%). The top gainers in the NSE Nifty include DR. REDDYS LAB (up 4.1%), INDIABULLS HOU. FIN. (up 3.8%) and HUL (up 3.2%). Other gainers include HINDALCO (up 2.5%) and ZEE ENTERTAINMENT (up 2.3%) are among the top gainers in NSE Nifty.

Over the last 12 months, the BSE Sensex has moved down from 38,277 to 32,089, registering a loss of 6,188 points (down 16.35%).

BANK OF MAHARASHTRA Financial Update...

BANK OF MAHARASHTRA net profit declined 103.6% YoY to Rs 1 billion for the quarter ended December 2019, compared to a loss of Rs 38 billion a year ago. Operating income rose 14.0% to Rs 30.2 billion during the period as against Rs 26.5 billion in October-December 2018.

For the year ended March 2019, BANK OF MAHARASHTRA reported 328.3% increase in net profit to Rs 47.6 billion compared to net profit of Rs 11.1 billion during FY18.

Revenue of the company grew 2.2% to Rs 108 billion during FY19.

The current Price to earnings ratio of BANK OF MAHARASHTRA, based on rolling 12 month earnings, stands at 6.7x.

This article (BANK OF MAHARASHTRA Surges by 9%; BSE BANKEX Index Up 2.1%) is authored by Equitymaster.

Equitymaster is a leading 'independent' equity research initiative focused on providing well-researched and unbiased opinions on stocks listed on the Bombay Stock Exchange.

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Company: Corporate Links and Services.
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Ref: 24826500
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Company: Corporate Links and Services.
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Ref: 24826499
Summary: Post- Vice Principal Location- Dhule- ( Maharashtra) Qual. & Exp.- Female below 40 years of age....

Company: Corporate Links and Services.
Qualification: Bachelor of Education (B.Ed)
Experience: 12 to 18
Salary: 8.00 to 9.00
location: Dhule / Dhulia
Ref: 24826498
Summary: Post- Vice Principal Location- Dhule- ( Maharashtra) Qual. & Exp.- Female below 40 years of age with ....

Company: Corporate Links and Services.
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Experience: 12 to 18
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location: Dhule / Dhulia
Ref: 24826496
Summary: Post- Vice Principal Location- Dhule- ( Maharashtra) Qual. & Exp.- Female below 40 years of age with....

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