Banking stocks came under heavy selling pressure on Monday, with the Bank Nifty index falling over 2 per cent in the early trade, as the Reserve Bank of India’s (RBI) recent measures aimed at supporting the rupee came into effect.
All constituents of the Bank Nifty traded in the red, indicating broad-based weakness across the banking pack. The index declined as much as 2.65 per cent, or 1,386.45 points, to 50,888.15, hitting an intraday low around 10:45 a.m. It was trading about 3.5 per cent, or nearly 1,700 points, above its 52-week low of 49,156.95.
AU Small Finance Bank declined 4.24 per cent, Axis Bank fell 4.25 per cent, Kotak Mahindra Bank dropped around 4 per cent, while IDFC First Bank slipped 4.17 per cent. IndusInd Bank was down 3.79 per cent, Bank of Baroda fell 3.68 per cent, Yes Bank declined 3.53 per cent and Canara Bank slipped 3.51 per cent. Federal Bank, HDFC Bank and ICICI Bank also traded lower by up to 3 per cent.
The Nifty Financial Services index also fell 2.41 per cent, or 587.75 points, to 23,785.45.
Among sectoral indices, the Nifty PSU Bank index dropped nearly 3 per cent, while the Nifty Private Bank index also declined around 3 per cent. Most banking stocks, including the SBI, Bank of Baroda, Canara Bank, Union Bank and Axis Bank, were trading with losses of up to 4 per cent.
The RBI on March 27 directed banks to cap their net open rupee (NOP-INR) positions in the foreign exchange market at $100 million at the end of each business day. Banks have been asked to comply with the directive at the earliest, but no later than April 10, 2026.
“Authorised Dealers shall ensure that their NOP-INR positions in the onshore deliverable market are maintained within $100 million at the end of each business day,” the central bank said in its circular.
The tighter cap applies specifically to the onshore market. Earlier, banks were allowed to offset positions across the onshore market, non-deliverable forwards (NDF) and currency futures, with overall limits of up to 25 per cent of their capital.
Market participants said the move could lead to an unwinding of existing dollar positions, prompting banks to sell dollars in the near term, which may lend support to the rupee.
However, the directive weighed on banking stocks, with sectoral indices emerging as top laggards in the market.
