Sensex sheds 12 points as banks play spoilsport

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Updated: December 25, 2015 12:36:58 AM

The Indian stock markets closed marginally down on Thursday as benchmark indices gave up the initial gains in a choppy session of trading. The Sensex closed 11.59 points or 0.04% lower, while the Nifty lost 4.90 points or 0.06% during the session.

The Indian stock markets closed marginally down on Thursday as benchmark indices gave up the initial gains in a choppy session of trading. The Sensex closed 11.59 points or 0.04% lower, while the Nifty lost 4.90 points or 0.06% during the session.

Banking stocks witnessed selling pressure as Reserve Bank of India’s (RBI) financial stability report (FSR) warned about a possible rise in the non-performing asset (NPA) ratio of Indian banks. The FSR report said the NPA ratio could reach 5.4% by September 2016. The BSE Bankex declined 0.42% during the session. ICICI Bank closed down 1.53% – the steepest fall for a Sensex constituent on Thursday.

sensex

“There was some cautiousness in the markets with RBI’s Financial Stability Report that said stressed balance sheets of large and medium sized firms have increased the risks to the banking sector,” said Jayant Manglik, president, retail distribution, Religare Securities. Manglik added that the winter session of Parliament which ended without passage of the GST and Bankruptcy Bills added to the negative sentiment.

However, on a weekly basis, the benchmark indices closed in the green for the second straight week. During the week, the Sensex gained 319.49 points or 1.25% while the Nifty climbed 99.1 points or 1.27%.

Recovering prices of crude oil in global markets helped shares of oil companies register gains. The BSE Oil index climbed 2..56% during the week. A barrel of Brent oil currently trades at $37.58 – a 2% rise compared to the closing price of the previous week.

Shares of telecom companies also rallied during the week as India’s mobile phone industry gets ready for consolidation due to the entry of Reliance Jio which is expected to increase competition. The BSE Telecom index soared nearly 5% during the week.

Shares of IT companies – which declined during last week over revenue warnings issued by TCS and Wipro – recovered partially during the week as the CNX IT index closed 0.56% higher. Investment banking firm HSBC said the industry growth would be on expected lines, but growing competition in global markets could be a downside risk for Indian players. “While Indian companies continue to gain market share globally, the pace of market share gains is likely to be impacted by growing prominence of majors like Accenture and niche players. This is likely to restrict positive surprise on growth,” the brokerage said.

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