Three-week low: Banking woes pull Sensex down 430 points

Bank shares were hammered following reports that ICICI Bank MD Chanda Kochhar and Axis Bank MD Shikha Sharma have been summoned by the Serious Fraud Investigation Office (SFIO) in the PNB fraud case.

The NSE Nifty after reclaiming the key 10,400-mark touched a high of 10,441.35 in early trade but later slipped into negative zone to hit a low of 10,215.90. It finally settled at 10,249.25, showing a sizeable loss of 109.60 points, or 1.06 per cent. Losses were broad-based as the S&P BSE MidCap index fell 0.8 per cent and the S&P BSE SmallCap index declined 1.3 per cent. This was the lowest closing for the BSE Sensex since December 14 when it had finished at 33,246.70 and also its biggest single-day fall since February 6, when it had lost 561.22.

Besides, the Reserve Bank of India move to impose a penalty of Rs 3 crore on Axis Bank for violation of NPA (non-performing assets) classification norms and Rs 2 crore on Indian Overseas Bank for not complying with the KYC (know your customer) regulations also proved to be a dampener. Shares of the State Bank of India fell 2.77 per cent to settle at Rs 256.50 while ICICI Bank tumbled 2.64 per cent to end the day at Rs 295.10. Bank of India fell by 6.46 per cent, Syndicate Bank 5.05 per cent and Indian Bank 5.02 per cent. Bank of Baroda stock eased by 2.45 per cent to end the trading session at Rs 135.15 and shares of the Punjab National Bank (PNB) settled at Rs 97.75, down 2.30 per cent from the previous close.

There were reports that the SFIO has asked senior executives from the 31 banks who have done business dealings with the firms promoted by Nirav Modi and Mehul Choksi to be present at its office in Mumbai.

However, other global markets remained firm. Japan’s Nikkei rose 1.79 per cent, Hong Kong’s Hang Seng moved up 2.09 per cent, while Shanghai Composite Index ended higher by 1 per cent. European markets opened higher despite uncertainty following Italy’s parliamentary election on Sunday which produced a hung parliament. Key indices in Europe such as Paris CAC 40 was up 0.74 per cent and Frankfurt’s DAX edged up 1.17 per cent. London’s FTSE too rose 0.97 per cent in their early deals.

Vinod Nair, head of Research, Geojit Financial Services, said, “The market gave up gains despite positive trade in global market. Consolidation continues led by broad selling across all sector. The market has broken Monday’s low while banks continue to struggle due to NPA issue, higher bond yield and cost of funds. Investors are little nervous about accumulating and are waiting for major triggers to get direction.”

“Early positivity that rode on global markets’ pull back proved to be brief, as turmoil in banking sector and persistent selling by FIIs dragged stocks lower.  Markets will now look forward to amendments to IBC and upcoming GST for positive signs,” said an analyst. Barring consumer durables, which closed marginally higher, all the other sectoral indices closed on a negative note with auto, banks, capital goods, FMCG and IT being the major losers. “We expect the markets to remain volatile and choppy in the near term due to bank scam, volatile global markets, continued selling pressure from FIIs and fear of faster than anticipated interest rate hike in the US. Market participants will keep a close watch on macro data like IIP, WPI and CPI inflation. Investors should consider this ongoing correction as an opportunity to invest in fundamentally sound companies,” said Jayant Manglik, president, Religare Broking.

Rupee rises 16 paise

Mumbai: The rupee on Tuesday rose by 16 paise to a fresh one-week high of 64.96 on steady unwinding of dollars by exporters and corporates. The Indian currency showed much resilience to a sudden crash in local equity markets and managed to stay strong against the dollar in afternoon trade, in line with most Asian peers. ENS