Bank,telecom stocks battered

Banking shares fell on concerns over exposure to telecommunications sector; telecom stocks also tank on verdict shock

Written by ENS Economic Bureau | Mumbai | Published: February 3, 2012 1:28 am

With a total exposure of around Rs 90,000 crore to telecom companies,shares of public sector lenders,including SBI and Punjab National Bank,fell on the bourses on concerns about their telecom sector exposure in the wake of a Supreme Court verdict cancelling 122 2G licences granted by former Telecom Minister A Raja. However,many of the stocks pared their losses towards the end of the trading session.

SBI which had lost nearly 5 per cent during the day,pruned the losses and ended at Rs 2,072.65,down 0.21 per cent on the BSE. PNB,the second-largest state-run bank,too saw profit booking at its counter and settled for the day 0.21 per cent lower at Rs 953.50. IDBI Bank declined 2.80 per cent to Rs 97.25. As per the RBI data,banks’ exposure to telecom sector has increased nearly 3-times from about Rs 30,000 crore in 2008 to Rs 89,964 crore as on September 23,2011. Public sector banks have the maximum exposure,followed by the foreign banks and new private sector banks,while old private sector banks have the least exposure to the sector.

“I don’t think we will be affected much by the verdict. We have a fund-based exposure of Rs 1,100 crore in five accounts,while another Rs 3,400 crore are non-fund based,which is based on a guarantee of roll-out. Now that the licences are cancelled that guarantee is not fulfilled,” said an SBI official. After the Supreme Court quashed 122 telecom licences issued to new operators in 2008,stocks of old players such as Bharti Airtel and Idea staged a smart rally on the bourses. Bharti which rose by 6.88 per cent was the top gainer from the Sensex pack. Idea firmed up by 2.68 per cent. However,new players like Unitech,DB Realty and Videocon fell on the bourses. Unitech fell by 7.04 per cent,Videocon 0.92 per cent and DB Realty 0.48 per cent. Reliance Com fell by 3.54 per cent and Tata Tele by 2.77 per cent in a strong market. The Sensex rose by 131 points to a 3-month high of 17,431.85 on buying support in metal,capital goods and IT stocks.

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