As the Indian equity markets hit a 15-month low on Tuesday, banking and realty stocks were the worst smacked ones among the Bombay Stock Exchange (BSE) sectoral indices. Surging inflation and high interest rates remain the major worries for the investors. Analysts in the markets said that there might be some monetary policy tightening by the Reserve Bank of India (RBI) to tame the high inflation in the country.
In BSE, Bankex lost 462.52 points, or 7.75%, before finally closing at 5,508 points. The Realty index closed at 4,503.45 points, dipping 259.08 points, or 5.44%, on Tuesday. Anil Advani, who heads research at SBICap Securities, said, ?We can attribute today?s fall to three factors, the markets started badly reacting to the weak global cues, then there was constant selling by the foreign institutional investors (FII) and finally the markets were seen tumbling after the Fitch report.?
The major reason for the banking stocks to perform so badly was the current credit crises in the US, said a market analyst. Shares in HDFC Bank were the worst hit in the Bankex, shedding Rs 116.30, or 11.26%, before closing at Rs 916.40.
On Tuesday, 30-share Sensex of Bombay Stock Exchange (BSE) closed at 12,676.19 points, losing 654.32 points or 4.91%. The broader S&P CNX Nifty of National Stock Exchange (NSE) shedded 202.50 points, or 5.01%, before ending the day at 3837.20 points.
?Other main motive was the ongoing inflation scenario to which the overall environment of the banking sector remains negative for the past few days. We may witness some monetary policy tightening from the RBI to tame the inflation within few days,? added Advani. All the 17 stocks in the Bombay Stock Exchange Bankex were in the red on Tuesday. All the 11 stocks in the Realty index also declined on Tuesday. Hitesh Agarwal, head of research at Angel Broking, said, ?Overall, there was uncertainty in the markets, but I think that bond prices are coming down which is impacting the bank stocks negatively. The surging inflation and high interest rates are keeping the realty stocks on the negative terrain.?
?We don?t see any major reasons to which the market will act positively. We think that the volatility in the markets is going to remain for another four months,? added Agarwal. In the past one month, realty sector has lost 1,166.78 points, or 20.58%, in BSE. Market analysts also added that realty sector stocks will start performing well once there are some easing in the interest rates.