The stock fell as much as 6.40 per cent, but recovered later to trade down 3.96 per cent at Rs 15.75 on BSE.
Shares of the company had ended 17 per cent higher on Tuesday ahead of the stock’s inclusion in the Nifty Next 50 index. The stock is now part of the index, and on the very first day, it is the top loser. The index traded up 0.51 per cent.
Market participants said the inclusion in a major index such as the Nifty Next 50 will lead to some inflows from domestic passive funds that track the index. More importantly, the inclusion is also a sign of the improving health of a bank that was on the brink of insolvency a year ago.
Shares of the bank have risen 38 per cent over the past eight months as the new management under SBI’s leadership has been trying to clean up the lender’s balance sheet and improve capital buffers. However, year to date, it is still down 12 per cent.
In February last year, the lender was rescued by a consortium of banks led by SBI as it faced the potential of bankruptcy due to its large bad loans and plummeting capital buffers. Since then, the lender has regularly released improved numbers, however, not everyone has the same faith in the company.
Most analysts are bearish on the scrip. A consensus of 15 analysts who track the stock shows the opinion is tilted towards ‘sell’ rating,
Inclusion in the Nifty Next 50 index could in the future result in an inclusion in the benchmark Nifty50 index since the former serves as an incubation for potential Nifty50 constituents.