Stocks bleed on bank scare
Mumbai: Nervous investors on Tuesday dumped banking stocks after the Serious Fraud Investigation Office (SFIO) asked several banks to provide the details of their funding to Mehul Choksi and Nirav Modi firms.
The knee-jerk reaction hit key indices with the BSE Sensex collapsing almost 430 points and the Nifty shedding around 110 points. Investor wealth was eroded by Rs 154,449 crore.
Market circles said apprehensions that the European Union may retaliate with higher duties on other products if the US imposes higher tariffs on steel and aluminium also contributed to the fall in equity values.
The 30-share BSE Sensex, which opened in the green and moved in a narrow range, came under pressure in the last 90 minutes of trade on reports that the investigative agencies have stepped up their probe into the Rs 12,700-crore alleged scam at Punjab National Bank (PNB).
As the trading session was on, reports said the SFIO had summoned ICICI Bank's Chanda Kochhar and Axis Bank's Shikha Sharma. While the agency tried to ascertain the details of the funds lent by banks to both the Nirav Modi and Gitanjali groups and senior officials of these banks provided the necessary details at the SFIO office here, worried investors were seen dumping banking stocks.
Shares of ICICI Bank cracked 2.64 per cent to Rs 295.10, while the Axis Bank scrip slid 1.31 per cent to Rs 516.80. Many other banking stocks, too, ended in the red on apprehensions that more skeletons could tumble out of the cupboard as the investigation progresses. Among the sectoral indices, the BSE Bankex was the second-largest loser, falling 1.44 per cent.
The 30-share index Sensex began on a strong note at 34047.43 and advanced to a high of 34060.13, following a positive trend in the other Asian markets. It, however, slipped into a negative zone after the news of the SFIO summons to hit a low of 33209.76. The index settled 429.58 points, or 1.27 per cent, lower at 33317.20.
This was the lowest closing for the guage since December 14 when it had finished at 33246.70 and also the biggest single-day fall since February 6, when it had lost 561.22 points. During the last five straight sessions, the 30-share index has lost over 1100 points.
The NSE Nifty, after reclaiming the key 10400-mark, touched a high of 10441.35 in early trade but later slipped into the negative zone to hit a low of 10215.90. It finally settled at 10249.25, showing a sizeable loss of 109.60 points, or 1.06 per cent.
"Key indices opened the session on a strong footing on firm global cues. Global stocks gained as worries about a potential trade war, in the aftermath of US President Donald Trump's tariff announcement on steel and aluminum, waned. However, local bourses were unable to sustain the gains as weakness persisted. Investors continued to trade with caution and sell on every rise," said Karthikraj Lakshmanan of BNP Paribas Mutual Fund.