Banking stocks drag down Sensex by 86 pts

Written by Markets Bureau | Mumbai, Apr 23 | Updated: Apr 24 2008, 05:42am hrs
Day ahead of the expiry of the derivatives contract for the month of April, Indian markets after witnessing choppy trades ended the day in the negative terrain on Wednesday. The 30-share Sensex of the Bombay Stock Exchange (BSE) after opening on a positive note was dragged in the negative terrain due to profit booking in the heavy weight banking sector stocks. The Sensex finally closed the day at 16,698.04, losing 85.83 points or 0.51%. The broader S&P CNX Nifty of the National Stock exchange (NSE) lost 26.5 points or 0.52% but managed to end the day above the psychological mark of 5,000 level at 5,022.80 points. The marker ended its seven-day winning streak, despite the fact that all the major Asian markets ended in the positive territory.

Amid fear of further write-offs by Indian banks due to over exposure to forex derivatives, the banking stocks were the worst performers on the Indian bourses on Wednesday. Selling pressure was witnessed the most in HDFC Bank, which lost around 3% or Rs 44.80 to close at Rs1,442.85 while Axis Bank lost around 1.47% to close the day at Rs 897.25. Other banking stocks such as Oriental Bank of Commerce, ICICI Bank and SBI fell in the range of 2%-3.5%..

The head of research at a local brokerage firm said, News unfolding about the Indian banks writing-offs due to over exposure in the forex derivatives products is causing suspicions among investors. However the picture is still not clear as losses are still notional and the total losses of the bank could be gauged only after the termination of the individual contract. We might see further selling pressure in the banking stocks in the days to come.

However the information technology (IT) stocks, which witnessed a steep fall in Tuesday's trade managed to seek investors attention as the BSE IT index saw a rise of 52.38 points or 1.33% to end the day at 3,982.85 points.

All the heavy-weights including TCS, which saw a fall of around 11% in the previous session, managed to end the day on a positive note adding Rs 2.82 or 0.32% to close at Rs 889.90. Some bottom fishing in Wipro and Infosys Technologies led these stocks to gain around 3% to close at Rs 443 and Rs 1,645 respectively.