Banks, oil, global cues drag Sensex 284 pts; Nifty sheds 1,000 pts from record high

Bears continued their grip on Dalal Street for the sixth consecutive session leading benchmark indices to lose another 1 percent on Wednesday. Deepening PNB fraud and weak global cues weighed on the sentiment.

The market ended at fresh 2018 closing low due to selling pressure in banks and oil stocks. All sectoral indices closed in the red barring FMCG.

The 30-share BSE Sensex has broken the 33,000 levels and hit an intraday low of 32,991.14, before closing down 284.11 points or 0.85 percent at 33,033.09.

The 50-share NSE Nifty ended below 10,200 levels, falling 95.10 points or 0.93 percent to close at 10,154.20. The index lost more than 1,000 points from its record high of 11,171.55 hit on January 29, 2018.

Experts remained cautious on the market and advised buying quality stocks. They expect the volatility to continue in coming sessions.

“We remain cautious on markets in the near term. Volatility is likely to remain high due to weak global sentiments, continued selling pressure from FIIs, rising bond yields in US and continued underperformance from PSU banks,” Jayant Manglik, President, Religare Broking said.

Vinod Karki of ICICI Securities said the top worry for investors at this juncture was uncertainty caused by: (a) the fear factor as evidenced by volatility in global stocks, (b) dearth of quality stocks at attractive valuations, (c) prospects of rising inflation as indicated by bond yields, (d) prospects of fiscal slippage in an election year, and (e) additional surprises in the NPA cycle (jewellery sector).

Manglik feels domestic macro data like IIP, WPI & CPI inflation, which are scheduled next week, will be closely tracked by the market participants.

He advised that traders should avoid taking overleveraged position due to extreme volatility.

On the global front, Asian markets closed lower amid choppy trade after the resignation of President Donald Trump’s economic adviser Gary Cohn raised fears of a global trade war. Japan’s Nikkei, China’s Shanghai Composite and Hong Kong’s Hang Seng were down 0.5-1 percent.

European markets were also mildly lower at the time of writing this article. The 300-point fall on Dow Jones futures indicated lower opening on Wall Street.

Back home, Nifty Midcap index underperformed, falling 1.6 percent on weak market breadth. About six shares declined for every share rising on the NSE.

All PSU banks stocks closed in the red, with the Nifty PSU Bank index falling 3.6 percent. Andhra Bank, Canara Bank, Allahabad Bank, SBI and IDBI Bank dropped 4-7 percent.

Punjab National Bank was down nearly 3 percent. Its Managing Director and CEO Sunil Mehta appeared before the Serious Fraud Investigation Office after being summoned in the Rs 12,700-crore bank fraud case.

ICICI Bank fell for sixth consecutive session, shedding nearly 3 percent despite clarification on its exposure to Nirav Modi and Gitanjali Group companies. ICICI Bank in its response said, “The bank has no exposure to the Nirav Modi group of companies, nor has it issued any Letter of Undertaking (LoUs); nor has any buyer’s credit exposure against LoUs with respect to the Nirav Modi group of companies as well as the Gitanjali group of companies.”

Adani Group stocks continued to see sharp fall, with Adani Enterprises, Adani Power, Adani Transmission and Adani Ports falling up to another 8 percent after Subramaniam Swamy’s comments on Gautam Adani.

Bharti Airtel shares fell 2.6 percent after Nomura slashed its target price on the stock to Rs 505 from Rs 625 per share as the stock is not cheap versus regional peers. The research house has maintained Buy call as it remains sanguine on earnings recovery in FY20.

Reliance Industries, HDFC, L&T, Indiabulls Housing, Vedanta, ONGC, HPCL and Tata Steel among others were down 1-4 percent.

FMCG index gained half a percent as ITC gained over a percent.

HCL Technologies was the biggest gainer among Nifty50 stocks, up 1.8 percent. Global brokerage house CLSA sees 25 percent upside in the stock after IT deal with Norway’s Statkraft.

Karnataka Bank, Andhra Bank, Canara Bank, IDBI Bank, South Indian Bank, Dena Bank, Adani Ports, Adani Transmission, Adani Enterprises, Reliance Capital, Reliance Power, Reliance Infrastrucutre, Jaiprakash Associates, Fortis Healthcare, Bombay Dyeing and Radico Khaitan were down 3-8 percent while United Spirits, NIIT Technologies and Hexaware gained 1-2 percent.