KFA puts market in turbulence

Led by real estate and banking stocks,the BSE Sensex fell over 283 points to 18,145.25 on heavy selling at 7-month high levels ahead of the settlement in monthly derivative contracts

Written by ENS Economic Bureau | Mumbai | Published: February 23, 2012 12:49:25 am

Led by real estate and banking stocks,the BSE Sensex fell over 283 points to 18,145.25 on heavy selling at 7-month high levels ahead of the settlement in monthly derivative contracts. Bank stocks fell amid reports that banks were getting ready for another bailout of troubled Kingfisher Airlines (KFA).

SBI was the top loser from the Sensex pack,falling 7.91 per cent on reports that the bank has committed to provide loan of around Rs 1,200 crore to Kingfisher Airlines. Among others,Bank of India fell 7.72 per cent,PNB 4.62 per cent,IDBI 6.92 per cent and Union Bank 6.70 per cent.

However,banking sources denied reports of a bailout. Bankers said the airline’s consortium of 16 lenders,which includes SBI,were still studying a debt-restructuring proposal put forward last week. Banks which own about a quarter of the airline through an earlier debt-for-equity swap,are sitting on notional losses as the stock has fallen steeply after the conversion. Kingfisher stock plunged 6.53 per cent to Rs 25.05 as the company continued to reel under cancellations and losses.

Banks held around 5 per cent stake in Kingfisher till December 2010 but their stake now stands at 23.37 per cent as a result of the debt recast package under which part of the Rs 7,651 crore loan was converted into equity at Rs 64.48 per share.

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