Equity benchmarks fell for the second straight session on Tuesday as banking stocks came under heavy selling pressure after S&P Global Ratings flagged off fresh concerns related to stress and uncertainties in the Indian banking sector.
The 30-share Sensex, that traded in the green for most part of the trading session, dipped in the red in the last hour of the session, ending the day at 31,453.51, down 261.84 points, or 0.83%.
State Bank of India was the worst performer among the Sensex pack, shedding 4.64%. Financial sector heavyweights such as Axis Bank, Kotak Mahindra Bank, ICICI Bank, Bajaj Finance and HDFC were among the top losers in the benchmark.
The broader Nifty ended the day at 9,205.60, down 87.90 points, or 0.95%. The Nifty Bank and the Nifty PSU Bank lost more than the benchmarks, shedding 2.39% and 3.28%, respectively.
In a statement, S&P Global Ratings said that Axis Bank’s results for the financial year 2019-20 “underscore high levels of stress and uncertainty across the Indian banking system. In our opinion, systemic pressures for Indian banks could rise owing to the recently announced extension of the nationwide lockdown to check the COVID-19 spread,” stated the release.
The negative sentiments were not limited to the banking sector as the overall market took a beating. On the BSE, 1,561 stocks lost ground as against only 838 gainers.
Incidentally, the drop in the Indian market on Tuesday came amid a positive trend in most of the Asian markets. The benchmarks of Hong Kong, Taiwan, Indonesia, China, Philippines and Singapore all gained ground.
“Our markets are struggling at higher levels and today, despite global peers suggesting some strength, we completely shrugged them off towards the latter part of the session,” said Sameet Chavan, chief analyst, technical and derivatives, Angel Broking.
“The major culprit in this late sell off was the financial stocks. Some of the marquee banking names along with NBFC stocks, started falling ferociously and this development weighed down heavily on our market,” he added.
Meanwhile, foreign portfolio investors (FPIs) continued their selling spree on Tuesday as net sellers at almost ₹1,060 crore. Domestic institutional investors net sold shares worth ₹995 crore. Meanwhile, the rupee recovered 10 paisa to close at 75.63 against the dollar.