Global cues knock 300 pts off Sensex; bank stocks worst hit

Written by Markets Bureau | Mumbai, May 26 | Updated: May 27 2008, 05:31am hrs
Ahead of the expiry of the derivatives contracts on May 29, negative cues from global markets led the key Indian equity indices to end the day in the red on Monday. The benchmark Sensex of the Bombay Stock Exchange (BSE), after opening on a negative gap, traded near its days low for most ofthe trading session, losing 301.14 points, or 1.82%, to finally end at 16,348.50 points.

The broader S&P CNX Nifty of National Stock Exchange (NSE) closed at 4875.05, declining 71.50 points, or 1.45%, on Monday.

Banking stocks took the worst beating on Monday with their sectoral index at the BSE slipping by 292.91 points, or 3.56%, to end the day at 7,939.25 points. Traders are expecting hardening of interest rates following State Bank of Indias decision to hike deposits rates, which can negatively impact profit margins, dealers said.

Experts also attribute Mondays fall to political uncertainties after the victory of BJP in Karnataka legislative assembly election.

Anil Advani, who heads research at SBI CAP Securities, said, Investors are apprehensive regarding the rising crude oil prices. BJPs win in Karnataka will force Congress to take several popular measures which in turn may increase our fiscal deficit.

Advani added that due to constant selling by FIIs in the past few days and weak global markets, Indian markets may see a further 5% correction in the coming weeks. Apart from Bankex, BSE Capital Goods shed 358.74 points, or 2.72%, before closing the day at 12,833.68 and BSE Metal, which lost 452.59 points, or 2.69%, before finally closing for 16,343.21. The realty index continued to dip, posting a loss of 170.05 points, or 2.26%, before finally closing at 7,340.09 points. The overall market breadth remained negative with about 667 stocks advancing as against 2,043 stocks that declined and 48 stocks that remained unchanged.