Indian stock markets dropped in the early morning trades with Sensex diving over 100 points and Nifty slipped below 10,400-level as the quantum of India's biggest banking scandal at PNB inched up further by Rs 942 crore.
Indian stock markets dropped in the early morning trades with Sensex diving over 100 points and Nifty slipped below 10,400-level as the quantum of India’s biggest banking scandal at PNB inched up further by Rs 942 crore. The S&P BSE Sensex shed 123.23 points or 0.36% to open at 33,733.55 while NSE Nifty slipped below 10,400-mark starting the day at 10,393.05, down by 33.8 or 0.32%. All of the shares of BSE Sensex traded in negative territory barring NTPC, IndusInd Bank, L&T, TCS and Sun Pharma. In a major blow yesterday, the Reserve Bank of India barred all the banks from issuing guarantees in the form of LoU (Letters of Undertaking) as the fraud at nation’s second-largest PSU lender PNB has been worsening day after day.
Shares of the fraud-hit PNB plunged heavily on Wednesday after the state-run bank informed that the quantum of the fraud involving Nirav Modi and Mehul Choksi may increase by Rs 942 crore. “The amount of Rs.942 cr were the regular limits sanctioned to Geetanjali Group under consortium lending and were standard credit exposure at the time of detection of the fraud. Now, this exposure is being added to the existing fraudulent amount. This amount has nothing to do with any new fraudulent LoUs/ LoCs,” PNB said in an exchange filing. The stock of PNB tanked as much as 4.4% to a day’s low of Rs 93.7 on BSE.
Shares of SBI, Yes Bank, Adani Ports, Tata Steel, Hero MotoCorp, ICICI Bank, Axis Bank, Bharti Airtel were the major laggards among the Sensex components falling up to 1.5%. Shares of Gitanjali Gems crumbled by 5% to a 52-week low of Rs 13.6 on Wednesday. NSE has levied penalties on as many as 24 companies including scam-hit Gitanjali Gems for failure to file financial results for the period October-December 2017. All the sectoral indices of NSE traded in red except Nifty IT and Nifty Pharma with Nifty PSU Bank and Nifty Metal index leading the losses.
The Reserve Bank of India also banned with immediate effect issuance of letters of comfort which, like LoUs, are used by importers to fund their overseas purchases. “On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/ LoCs for Trade Credits for imports into India by AD Category –I banks with immediate effect,” RBI said in a statement.
Wall Street’s major indexes fell on Tuesday as the dismissal of U.S. Secretary of State Rex Tillerson and the possibility of additional U.S. import tariffs against China dragged down stocks across sectors, Reuters said in a report. The Dow Jones Industrial Average fell 171.58 points, or 0.68 percent, to 25,007.03, the S&P 500 lost 17.71 points, or 0.64 percent, to 2,765.31 and the Nasdaq Composite dropped 77.31 points, or 1.02 percent, to