Have bank stocks started reacting to apprehensions of US Fed meeting?

Shares of Indian Overseas Bank, majority controlled by the Government of India, fell to their lowest level in at least five years after the PSU lender reported a sharp surge in non-performing assets coupled with an equally precipitous drop in first quarter profit.

IOB said its first quarter consolidated Net Profit fell 50 percent to 14.7 crore rupees compared with 27.2 crore rupees in the same quarter a year ago. Total Income during April-June gained 6 percent to 6,672 crore rupees from 6,284 crore rupees in the year ago period.

The bank's Gross Non Performing Assets surged to 9.4 percent versus 5.8 percent in the same quarter previous year. Similarly, the Net NPAs showed an upward trajectory, rising to 6.31 percent in the first quarter compared with 3.85 percent in the year ago period, the bank said in a statement to the exchanges.

IOB Futures were the top losers in the Futures and Options market with Open Interest rising 9.1 percent and the counter showing a heavy build up of short positions.

They were down 2.25 rupees, down 5.9 percent, at 35.70 rupees.

IOB's market capitalisation has fallen 49 percent in the past one year to 4,694 crore rupees as investors dumped PSU banking stocks on the back of the rising NPA problem and a critical slowdown in the main industrial sectors of Infrastructure, steel, power and construction.

(Image credits: frontline)