Mkts down for 2nd day as bank stocks extend losses
Concerns about inflation,weak global trends also weigh mkt sentiment
image for illustrative purpose
Mumbai Benchmark equity indices BSE Sensex and NSE Nifty declined for a second straight day on Friday due to losses in HDFC Bank and ICICI Bank and a negative trend in Asian and European markets.
The trend in the domestic market remained weak post the RBI monetary policy and the unexpected announcement of reducing cash in the banking system. The 30-share BSE Sensex fell by 365.53 points or 0.56 per cent to settle at 65,322.65 points. During the day, it tanked 413.57 points or 0.62 per cent to 65,274.61. The NSE Nifty declined by 114.80 points or 0.59 per cent to end at 19,428.30. Foreign institutional investors (FIIs) were buyers on Thursday as they bought equities worth Rs 331.22 crore, according to exchange data.
“The domestic market continued to experience selling pressure, with banking stocks extending their decline in reaction to the RBI’s liquidity absorption measures,” said Vinod Nair, Head of Research at Geojit Financial Services. “The escalating concerns about inflation further weighed on domestic market sentiments. Despite the US CPI coming in lower-than-expected and the UK GDP beating estimates, global sentiment remained unfavourable,” Nair added.
The Reserve Bank of India (RBI) on Thursday left its key interest rates unchanged for a third straight meeting but signaled tighter policy if food prices continue to drive inflation higher. The hawkish stance was also reinforced by the unexpected announcement of reducing the cash in the banking system by raising the incremental cash reserve ratio (I-CRR) to 10 per cent on the incremental NDTL (net demand and time liabilities) over the last three months. This will help in absorbing a large part of the excess liquidity created through the return of the Rs2,000 notes and the large dividend to the government from RBI. From the Sensex pack, IndusInd Bank, NTPC, Asian Paints, Hindustan Unilever, JSW Steel, Tech Mahindra, Bajaj Finance, Infosys, Wipro, ICICI Bank, Bajaj Finserv, HDFC Bank and Tata Motors were among the major laggards. HCL Technologies, Power Grid, Titan, Reliance Industries, UltraTech Cement, Tata Steel, State Bank of India and Mahindra & Mahindra were the gainers.
