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Sensex

Bank stocks hit markets as Sensex loses more than 200 points, Nifty slumps too

On Thursday, the markets took a major hit as both the key indices- Sensex and Niftylost around 0.70 per cent when the bourses closed for the day.

The 30-share BSE Sensex lost 238.86 points to close at 32,237.88 while the broader 50-share NSE Nifty came down 67.85 points to close at 10,013.65.

The slump came mainly on the back of bank stocks being hit as the Nifty Bank index shed 1.6 per cent during the day. Sanjiv Bhasin, Executive VP- Market & Corporate Affairs, IIFL told timesofindia.com that the reduction in deposit rates was the major reason behind the slump as the net interest margin (NIM) of  banks will come under pressure. “It will be difficult for banks to add on to their earnings,” he added.

A section of the Street had anticipated buoyancy in sentiments after the announcement of trimming of key interest rates by Reserve Bank of India (RBI) on Wednesday but much to their dismay the numbers started slipping soon after. Analysts believe that the investors had already factored in the 25 basis points cut in repo rate and that they are now reaping benefits of the continued bullish run by booking profits.

“The markets had already factored in a 25 basis points cut in rates by the RBI and the central bank has been late by 3-4 months to implement it as the food inflation will now go up on the back of tomato and onion prices”, said Bhasin.

In the wake of volatility, it will be crucial that the markets hold on to the psychological marks. “If the Nifty falls below the 9,900-mark, we may well see a 5 per cent correction in markets in the next one month”, Bhasin said.

In Thursday’s trade, all the major bank stocks finished in the red with pharma stocks like Lupin, Cipla and Dr. Reddy also dragging the numbers down.

Reliance Industries hit a new all-time high in intra-day trade and Indian Oil stocks surged by 6 per cent after the oil major’s first quarter results beat estimates. Auto stocks were on the rise while Bharti Airtel also featured among the major gainers.

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