What is causing panic selling across banking stocks? Problems at the Punjab and Maharashtra Co-operative Bank (PMC) coupled with the Reserve Bank of India's (RBI) action against Lakshmi Vilas Bank is hurting sentiment.
The wealth destruction across several financials in 2019 has been very sharp. Reliance Capital has lost 90 percent of its value. Dewan Housing Finance (DHFL), Yes Bank and IIFL Holdings have lost anywhere between 77 percent and 88 percent.
SREI Infra and Indiabulls Housing have lost over 70 percent. Lakshmi Vilas Bank is down 62 percent and Magma Fincorp has lost 54 percent
Indiabulls Group currently has cash of Rs 20,000 crore and according to the rating agencies, it can pull on very easily for a year with that kind of money. However, there are research reports indicating how banks are exposed to Indiabulls and that just led to a bare run on private sector banks that are exposed to Indiabulls.