Stock markets fell more than one per cent for a third consecutive session on Wednesday, pushing indexes to a 21-month low as state-run banks were hit hard by a slew of earnings that showed a spike in bad loans and provisions for sour debt.
The benchmark Sensex lost 262 points at 23,758.90 on sustained selling pressure. The broader Nifty ended 1.13 per cent lower, trading at levels last seen when Prime Minister Narendra Modi was elected. The index is already down 3.7 per cent for the week, heading for its biggest weekly fall since a 4.5 per cent fall in the first week of the year.
Jayant Manglik, president, retail distribution, Religare Securities, said, “Nifty extended its fall for third successive session on Wednesday and lost over a per cent amid volatility. Beside domestic issues, growing concerns of global slowdown are adding to the investors’ worries and pushing index to newer lows with every passing day. Following the benchmark index, mostly sectoral indices ended in red where PSU bank and realty pack lost maximum.”
“While markets have lost close to 4 percent this week so far, there’s no sign of any respite yet. In addition, we have seen good amount of selling pressure in the quality stocks also in last two trading sessions, which is indeed not a positive sign. Considering all, we suggest to uphold extra caution in leveraged trades and keep them hedged,” he said.
Shares of state-run lenders plunged by up to 12.4 per cent as investor sentiment was hit by mounting bad loans and disappointing earnings reported by them. Central Bank of India shares plummeted by 12.37 per cent, Allahabad Bank slumped 9.61 per cent and Punjab National Bank dived 8.99 per cent.
Among others, Dena Bank shares declined by 7.52 per cent while Indian Overseas Bank tumbled 5.20 per cent on the BSE. SBI scrip fell by 4.82 per cent to Rs 158.95 ahead of the bank’s financial results. All these stocks had hit their respective 52-week lows during the day. The BSE bank index fell by 2.04 per cent to settle at 16,519.15.
However, extending gains for the second straight day, the rupee rose by another 5 paise to 67.85 on persistent selling of dollars by banks and exporters in view of weaker American currency in the overseas market despite fall in domestic equities.
The domestic unit resumed flat at Tuesday’s closing level of 67.90 per dollar but dropped further to 67.9850 on initial dollar demand from banks. However, it recovered afterwards to 67.8150 on fresh selling of dollars by banks and exporters due to weakness in US currency overseas before concluding at 67.85, showing a loss of five paise or 0.07 per cent.
US stocks mostly inched higher, setting the market up for its first gain after three down days. Traders were encouraged on Wednesday by word from US Federal Reserve chairman Janet Yellen that the central bank will be cautious about raising interest rates.
European stocks rose on Wednesday, rallying after losses in Asia, as concerns about the health of banks that have hammered shares globally in recent days eased and oil prices recovered from Tuesday’s steep falls. The pan-European FTSEurofirst 300 index rose 2.2 per cent, with investors cheered by media reports that Deutsche Bank was considering buying back several billion euros of its debt. Germany’s flagship lender, whose shares have fallen almost 40 per cent this year, rose more than 13 per cent. MSCI’s index of Asia-Pacific shares outside Japan fell 0.3 per cent. Australian stocks closed down 1.2 per cent.
Oil prices, which fell 8 per cent on Tuesday, rose on the prospect of OPEC and rival producers cooperating to tackle a supply glut that has sent prices to a 12-year low.