Domestic concerns once again came back to haunt the local equity markets as worries over delay in monsoon resurfaced pulling down the benchmark Nifty below the crucial 8,000 mark while investors took a swipe at banking shares.
Today’s free fall in markets came a day after the Sensex gained more than 350 points in a relief rally boosted by the US index MSCI’s decision to defer inclusion of Chinese shares in its emerging markets index, a move expected to stem outflow of foreign capital from the domestic market.
However, the bounce-back proved to be short-lived as selling pressure once again intensified today, erasing all the gains clocked on Wednesday with the Sensex and Nifty both ending at an eight-month low.
While the 30-share BSE S&P Sensex ended at 26,370.98, down 469.52 points or 1.7 percent from its previous close.The downbeat sentiment prevailed in the domestic market despite the positive cues from the global markets.
Intra-day, the index fell to a low of 26,348.93, down 492 points before trimming some losses towards the close. Similarly, the broader 50-share CNX Nifty concluded at 7,965.35, down 159.10 points or 1.9 percent.
Market breadth ended weak, with 1,857 stocks declining against 782 advances on the BSE.
Among the global markets, other key indices in the Asian region ended over 1 percent higher, while key European gauges were up over 1-2 percent tracking overnight recovery in the US markets.
“Nervousness was seen in the markets because of the delay in monsoon arrival. Investors are worried that a delayed rainfall could hurt growth and push up inflation. The fall was mostly seen in banking shares as bank recapitalisation is taking time, and with rising sticky loans the market is worried that NPA levels could flare up,” said Sudip Bandyopadhyay, director and CEO of Destimoney Securities.
Although, the Nifty has slipped below 8,000 mark, the markets may see limited correction from here on and could move in a range before witnessing a recovery, said Bandyopadhyay.
Banking shares were the worst hit, with BSE Bankex tumbling nearly 2.4 percent to 19,859.86. Earlier today, Reserve Bank of India (RBI) Deputy Governor S.S. Mundra said a planned $1.2 billion capital infusion by the government into state-run lenders during the fiscal year to March 2016 will not be enough, according to a Reuters report.
“We’ve been taking it up with the finance ministry. This is the time when many of the banks are in need of higher capital,” Mundra was quoted as saying in the report.
Among the laggards, Kotak Mahindra Bank tumbled 4.1 percent to Rs 1,280.70, PNB 3.7 percent to Rs 132.60, Bank of Baroda 3.4 percent to Rs 148.45, State Bank of India 2.4 percent to Rs 253.85, HDFC Bank 1.6 percent to Rs 999.85 and ICICI Bank 1.3 percent at Rs 288.55.
In the Sensex pack, Tata Power slumped 4.9 percent to Rs 70.15, Tata Motors 3.6 percent to Rs 430.35, BHEL 3.2 percent to Rs 243.25, Reliance Industries 3.2 percent to Rs 877.20 and Wipro 2.8 percent at Rs 547.55.