Nifty Bank plunged 1,999 points, marking a 15% decline over the last month
The RBI directive caps banks' net rupee exposure at $100 million by April 10
PSU banks like Union Bank and Canara Bank led the crash with 5–6% drops
Banking stocks witnessed a sharp plunge on Monday, with the Nifty Bank index falling by around 1,999.25 points to close at 50,275.35. The index emerged as the top loser among derivative-eligible indices, declining 3.82%, compared to a 2.14% drop in the Nifty50.
Over the past month, the Nifty Bank index has fallen 15%, significantly underperforming the benchmark index, which declined 9.4% during the same period.
2 March 2026
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The decline comes after the RBI issued a targeted directive to banks to curb the sharp fall in the rupee. It has instructed banks to cap their net exposure to the rupee at $100 million by the end of each trading day, effective April 10.
“The index not only extended its downtrend but also broke below its previous swing low of 51324 (23rd March), signaling continued weakness in the banking space. The price structure remains decisively bearish, with sustained lower lows and selling pressure across constituents. The sharp cut highlights lack of support from heavyweight banking stocks, further dragging the index lower. Bank Nifty ended FY26 with a loss of 2.50%, underlining the relative underperformance in the latter part of the year,” Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities said.
Top Losers
Union Bank of India, Canara Bank, and Bank of Baroda were the biggest losers of the day, with their shares falling 6.55%, 5.21%, and 5.07%, respectively. In contrast, ICICI Bank, HDFC Bank, and Axis Bank were relatively less impacted, with declines of around 1.78%, 2.8%, and 3.05%, respectively.
“Amid unresolved global tensions, rising oil prices, and continued FII outflows, the market ended the final trading session of the current financial year on a cautious note. Banking stocks were among the key laggards following the RBI’s new restrictions on banks’ foreign exchange positions aimed at stabilizing the rupee, which led to sharp declines across major private and public sector lenders. While valuations now appear more favourable after the recent correction, the trajectory of earnings revisions remains the key determinant of market direction. Continued volatility in oil prices and rupee weakness may exert pressure on input costs, increasing the risk of near-term earnings downgrades,” Vinod Nair, Head of Research, Geojit Investments Limited said.
What Led the Fall?
The RBI has instructed banks to cap their net exposure to the rupee at $100 million by the end of each trading day, effective April 10.
That means, banks will no longer be able to hold large positions that profit from movements in the rupee, whether appreciation or depreciation. This move is intended to give the central bank greater control over excessive speculation that can destabilise the currency.
“The Reserve Bank may prescribe limits for open positions involving the rupee (NOP-INR) for exchange rate management, depending on market conditions,” the directive stated.
“Accordingly, it has now been decided that Authorised Dealers shall ensure that their NOP-INR positions in the onshore deliverable market are maintained within US$100 million at the end of each business day,” it added.
A net open position (NOP) reflects the difference between a bank’s dollar purchases and sales; higher positions indicate larger bets on currency movements. Through this directive, the RBI aims to prevent large, one-sided trades that could amplify volatility in the currency market.
