Sensex, Nifty Come Off Heady Heights, Banking Hits a Wall
The Reserve Bank has initiated a 'prompt corrective action' against Bank of India for mounting bad loans, placing restrictions on it, including issuing of fresh loans and dividend distribution, BoI said.
File photo of the Bombay Stock Exchange. (REUTERS)
Mumbai: Stock benchmarks on Wednesday had a hard landing after flying to new highs, pulled down by banking stocks in the wake of RBI action that rekindled fears about bad loans.
The Reserve Bank has initiated a 'prompt corrective action' against Bank of India for mounting bad loans, placing restrictions on it, including issuing of fresh loans and dividend distribution, BoI said today.
Banking stocks led by PNB, Federal Bank, Bank of Baroda, HDFC Bank, SBI, Kotak Bank, Yes Bank and IndusInd Bank all suffered, with a fall of up to 4.35 percent.
"The surge to record peaks failed to gather further momentum as RBI placing a bank under prompt corrective action framework put the sector on the backfoot. With RBI minutes as well as decision on US tax overhaul is awaited, caution was the watchword in the second half of the day," said Anand James, Chief Market Strategist, Geojit Financial Services.
The open was positive for the 30-share Sensex, which hit a new high of 33,956.31, but gave in to the selling pressure due to NPA worries and settled at 33,777.38, down 59.36 points -- or 0.18 percent.
The BSE index had closed at a record high of 33,836.74 yesterday, with a rally of 783.70 points in the previous four sessions.
Similarly, the broader NSE Nifty went up to a fresh peak of 10,494.45, but lost it by closing down 19 points, or 0.18 percent, at 10,444.20. It had finished at a record high of 10,463.20 yesterday.
The BSE banking index was the weakest of the lot, dropping 0.34 percent, followed by auto and PSUs. The finance ministry today said it did not provide the entire allotted amount towards recapitalisation as most of the public sector banks meet performance targets.
Besides, the rupee edging down from 3-month high against the dollar hit sentiment.
Asian stocks moved both ways and Europe opened lower as the judgement day neared for the US tax cut legislation. Foreign portfolio investors (FPIs) net sold shares worth Rs 407.83 crore yesterday, but domestic institutional investors (DIIs) bought equities to the tune of Rs 357.40 crore.
Dr Reddy's was in a pool of red, tumbling the most by 1.80 percent, followed by Bharti Airtel. Other heavyweights such as Tata Steel, HDFC and NTPC added to the weakness.
Broader markets outsmarted their key indices, jumping up to 0.79 percent.
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