Banking fraud subdues risk-taking appetite, equities close lower

Although both indices - BSE Sensex and NSE Nifty50 - recouped some losses during the late afternoon trade session on short covering, they failed to exit the negative territory and closed on a lower note.

Mumbai, Publish Date: Feb 20 2018 1:07AM | Updated Date: Feb 20 2018 1:07AM
Banking fraud subdues risk-taking appetite, equities close lowerRepresentational Pic

The recent turbulent developments in the country's banking sector kept investors' risk-taking appetite low, leading the key Indian equity indices to close in the negative territory for the fourth consecutive trade session on Monday.

According to market observers, heavy selling pressure in capital goods, auto, metals and banking stocks, along with continued outflow of foreign funds and a surge in crude oil prices, dampened market sentiment despite positive global cues.

Although both indices -- BSE Sensex and NSE Nifty50 -- recouped some losses during the late afternoon trade session on short covering, they failed to exit the negative territory and closed on a lower note.

The wider Nifty50 of the National Stock Exchange (NSE) shed 73.90 points or 0.71 per cent to close at 10,378.40 points. 

During the intra-day trade, the barometer 30-scrip Sensitive Index (Sensex) of the BSE fell by over 400 points to touch a low of 34,122.96 points.

On a closing basis, the Sensex declined by 236.10 points, or 0.69 per cent, to 33,774.66 points.

The BSE market breadth was bearish as 2,061 stocks declined as against 689 advances.

In terms of broader markets, the S&P BSE mid-cap index closed lower by 1.05 per cent and the small-cap index by 0.99 per cent.

"Markets corrected further on Monday. A sharp bounce back from the lows in the afternoon session curbed the losses," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"Sentiments continued to be affected by the recent detection of a massive fraud at a Mumbai branch of the state-run Punjab National Bank (PNB). Metal stocks (especially Steel) came under selling pressure as investors got concerned over the funding arrangement for bids for sick companies by sector leaders," he said.

According to Jasani, fresh rise in global crude prices also marred sentiments. 

Vinod Nair, Head of Research, Geojit Financial Services, said: "Weak domestic cues continued to impact investor's sentiment and directed the market to consolidation. PSU banks are likely to remain under pressure due to the current irregularities while participants are taking a wait-and-watch approach until the storm settles."

On the NSE, the Nifty PSU Bank index declined by 2.46 per cent.

Following recent developments in the $1.8-billion fraud detected by the PNB, shares of Gitanjali Gems plunged almost 10 per cent while those of the bank closed lower by over 7 per cent on Monday.

"Volatility may increase ahead of F&O (futures and options) expiry, however stock specific approach during this consolidation will give long term benefit," Nair added.

In terms of investments, provisional data with the exchanges showed that foreign institutional investors sold scrips worth Rs 895.79, crore while domestic institutional investors purchased stocks worth Rs 586.52 crore.

All the sub-indices of the BSE closed in the red led by S&P BSE capital goods -- down 299.69 points -- followed by auto (down 275.19 points), metal (down 241.52 points) and banking (down 162.98 points) indices.

Major Sensex gainers on Monday were: Coal India, up 0.54 per cent at Rs 304.65; Infosys, up 0.46 per cent at Rs 1,130; Kotak Bank, up 0.45 per cent at Rs 1,056.50; Reliance Industries, up 0.45 per cent at Rs 925.85; and Axis Bank, up 0.32 per cent at Rs 539.45.

Major Sensex losers were: Tata Steel, down 5.82 per cent at Rs 648.25; Dr Reddy's Lab, down 2.75 per cent at Rs 2,151.85; Adani Ports, down 2.72 per cent at Rs 393.40; Larsen and Toubro, down 2.35 per cent at Rs 1,296.75; and Mahindra and Mahindra, down 2.24 per cent at Rs 727.10. The currency markets were closed on Monday for Chhatrapati Shivaji Maharaj Jayanti. 

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