IndusInd Bank stock falls 23 percent to 52-week low on derivatives discrepancies

IndusInd Bank shares plunged by 2337 in early trade on Tuesday hitting a 52week low following the private lenders disclosure of discrepancies in its derivatives portfolio The stock extended its losing streak for the fifth consecutive session becoming the biggest drag on the SensexOn the BSE IndusInd Bankrsquos stock tanked 22837 reaching the lower circuit at 69525 per share marking its lowest level in the past year Similarly the stock plummeted by 216737 on the National Stock Exchange NSE touching a 52week low of 70535 apieceAccording to PTI reports the sharp decline made IndusInd Bank the worstperforming stock among the 30 constituents of the BSE Sensex The broader market was also under pressure with the Sensex falling 255 points or 03437 to 7386017 Meanwhile the NSE Nifty dropped 4765 points or 02137 to 2241265 in early tradeThe steep selloff followed the bankrsquos regulatory filing on Monday where IndusInd Bank reported that an internal review had uncovered certain discrepancies in the account balances of its derivatives portfolio The Mumbaibased lender stated that the review was conducted in line with the Reserve Bank of Indiarsquos RBI directives issued in September 2023 regarding the investment portfolios of banks specifically concerning lsquoOther Asset and Other Liabilityrsquo accountsAccording to the bankrsquos statement the internal assessment revealed that the adverse impact of the discrepancies could be around 23537 of the banks net worth as of December 2024 This translates to an estimated hit of approximately 1500 crore according to market expertsFollowing the disclosure IndusInd Bank held an analyst call to address concerns The bank confirmed that an external auditor has been engaged to conduct an independent review of the matter with the report expected to be finalised by the end of March 2024Despite the negative development IndusInd Bank sought to reassure investors by stating that the banks overall profitability and capital adequacy remain healthy enough to absorb the onetime impact from the discrepanciesThe stock had already faced pressure on Monday closing nearly 437 lower after the RBIrsquos decision to extend the tenure of the incumbent CEO by only one year The bank had reportedly sought a threeyear extensionMarket analysts believe that the combination of governance concerns the RBIrsquos cautious approach on leadership tenure and the uncertainty around the derivatives portfolio have contributed to the sharp fall in IndusInd Bankrsquos stockThe discovery of discrepancies in the derivatives portfolio raises concerns about the banks internal controls and could impact investor confidence in the short term said a financial expert quoted by PTIAs per PTI reports the steep fall in IndusInd Banks stock reflects broader market nervousness with investors remaining cautious about the potential financial and reputational fallout from the derivatives issue The coming weeks are expected to be critical as the external auditors report could provide further clarity on the extent of the problem and its longterm impact on the banks financial healthIndusInd Bankrsquos management has assured investors that corrective measures are already being implemented to prevent such discrepancies from occurring in the future However market sentiment is likely to remain fragile until the final audit report is releasedWith inputs from PTI