Bank stocks drag markets down, Nifty registers biggest single-day fall in over a month

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Mumbai | Published: November 14, 2019 3:00:12 AM

Bank stocks pulled the benchmark indices down on Wednesday with the Bank Nifty sliding as much as 574 points, marking its biggest single-day fall in more than a month, as the latest data released on macro economy spooked investor sentiment.

Shares of ICICI Bank, Axis Bank, State Bank of India, HDFC Bank and IndusInd Bank contributed to the 200 points fall in the Sensex.

Bank stocks pulled the benchmark indices down on Wednesday with the Bank Nifty sliding as much as 574 points, marking its biggest single-day fall in more than a month, as the latest data released on macro economy spooked investor sentiment. The country’s industrial production witnessed a sharper-than-expected fall of 4.3% in September — its worst performance in the series that began in April 2012. The weakness in the rupee also affected investor sentiment, with the local currency falling to an over two-month low.

Shares of ICICI Bank, Axis Bank, State Bank of India, HDFC Bank and IndusInd Bank contributed to the 200 points fall in the Sensex. While the Sensex slid 229.02 points to end the session at 40,116.06, the broader Nifty50 fell 73 points or 0.61% to settle at 11,840.45 points. Banks, including financial services, command a weightage of about 40% on the Nifty50.

Amit Khurana, head of equities & research, Dolat Capital, observed, “The market has been stretched over the last few days and expectation of higher inflation numbers for October also caused sell off in banking stocks.” The CPI Inflation data, which came out post market hours, hit a 16-month high of 4.62% in October, led by a surge in food inflation.

The negative sentiment rubbed off on most sectoral indices on Wednesday. Of the 19 sectoral indices compiled BSE, all barring three ended the day in the red with BSE Metal falling as much as 2.3%, followed followed by BSE Realty and BSE Bankex each coming off about 2%.

India Inc’s revenues declined in the September quarter, as companies struggled to push through volumes even as pricing power eluded most. For a sample of 693 companies, the net revenue has fallen by about 4% y-o-y. While net profits rose 7.65%, it was a result of tax cuts announced by the government in September. Subdued loan growth at virtually every bank and NBFC is evidence of the sluggishness in industry.

Foreign portfolio investors have bought Indian equities over $1.6 billion so far in November. On the other hand, domestic institutional investors, including mutual funds, sold shares worth $678 million since November 1.

Nilesh Shah, founder and chief executive officer, Envision Capital, said, “The revised outlook by Moody’s and the latest IIP data could also be the triggers for the softness in the market.”

Market breadth on Wednesday was tilted towards sellers, nearly two stocks declined for gain in every stock.

On the NSE, 1,176 stocks declined, compared with 678 stocks advancing, and 100 stocks remaining unchanged. On the BSE, 1,640 stocks ended in the red against 941 stocks closing higher.

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