RBI measures impact market mood: PSU and private bank indices lead losses

Mumbai: Banking stocks came under heavy selling pressure on Monday, with the Bank Nifty index falling over 2 per cent in early trade, following the Reserve Bank of India’s (RBI) latest measures aimed at supporting the rupee.

All constituents of the Bank Nifty traded in the red, signalling broad-based weakness across the banking sector. 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 remains about 3.5 per cent, or nearly 1,700 points, above its 52-week low of 49,156.95.

Key bank movements

• AU Small Finance Bank: -4.24%
• Axis Bank: -4.25%
• Kotak Mahindra Bank: -4%
• IDFC First Bank: -4.17%
• IndusInd Bank: -3.79%
• Bank of Baroda: -3.68%
• Yes Bank: -3.53%
• Canara Bank: -3.51%
• Federal Bank, HDFC Bank, ICICI Bank: up to -3%

The Nifty Financial Services index fell 2.41 per cent, or 587.75 points, to 23,785.45. Among sectoral indices, the Nifty PSU Bank index and Nifty Private Bank index both dropped nearly 3 per cent, with major banks including SBI, Bank of Baroda, Canara Bank, Union Bank, and Axis Bank registering losses of up to 4 per cent.

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RBI directive on net open rupee positions

On March 27, the RBI instructed 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 must 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 RBI said.

Previously, banks were allowed to offset positions across the onshore market, non-deliverable forwards (NDFs), and currency futures, with overall limits up to 25 per cent of their capital. The tighter cap now applies specifically to the onshore market.

Market reaction

Market participants said the move could trigger an unwinding of existing dollar positions, prompting banks to sell dollars in the near term, which may provide support to the rupee.

However, the directive has weighed on Indian banking stocks, with sectoral indices emerging as the top laggards in early trading.

IANS