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Banking stocks depress key equity indices (Roundup)

IANS  |  Mumbai 

A massive sell-off in banking sector stocks pulled the key Indian equity indices -- Sensex and NSE -- lower on Wednesday.

According to market observers, heavy selling pressure was witnessed in banking, healthcare and automobile stocks.

On Wednesday, the barometer 30-scrip Sensitive Index (Sensex) of the receded by 144.52 points or 0.42 per cent to 34,155.95 points from Monday's close.

The equity markets were closed on Tuesday.

Similarly, the wider of the National Stock Exchange declined by 38.85 points or 0.37 per cent to 10,500.90 points.

In terms of the broader markets, the mid-cap index inched up by 0.17 per cent and the small-cap index by 0.16 per cent.

The intra-day trade saw the barometer Sensex touch a high of 34,473.43 points on the back of positive cues from global markets and a low of 34,028.68 points which was led by a massive sell-off in the banking sector stocks.

The market breadth was bullish as 1,368 stocks advanced as against 1,470


"Markets corrected on Wednesday thereby resuming the intermediate downtrend," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"Selling accelerated in the afternoon session led by a drop in PSU banking stocks on the back of news that (PNB) had detected a $ 1,771.69 million fraud at a single branch in "

"Major Asian markets have closed on a positive note, barring the Nikkei and Straits indices. European indices like FTSE 100, DAX and are trading in the green."

The massive-sell off in the banking sector stocks was triggered after the Reserve of India's (RBI) announced new norms to deal with the NPAs on Monday.

"The PSU banks witnessed sell-off as RBI scrapped a number of loan-restructuring schemes which may lead to further jump in provisions impacting profitability of these banks," said Vinod Nair, Head of Research,

Besides RBI's latest moves, the massive $1.8 billion fraud detected at one of the branches of PNB, the second largest public sector in also spooked investors.

"PNB fell 9.8 per cent as investors wondered about the impact of the fraud on the

profits or book value of the even as they await data about the

possibility and extent of recovery that is possible," Jasani told IANS.

"If no recovery is possible, the impact could be Rs.42-46 per share out of which the stock price has already fallen -- Rs 16 today."

On a closing basis, the scrip of PNB closed at Rs 145.80, down by Rs 15.85 or 9.81 per cent from its previous close of Rs 161.65.

Apart from PNB, stocks of other lenders like Yes Bank, State of India, and ICICI were also impacted.

On the currency front, the Indian rupee strengthened by 22 paise to close at

64.09 against the US dollar from its previous close at 64.31.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold scrips worth Rs 728.71 crore while domestic institutional investors off-loaded stocks worth Rs 152.39 crore.



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 14 2018. 19:30 IST