NEW DELHI: Bank stocks let the bulls down on Dalal Street on Tuesday after reports suggested that domestic lenders were staring at a major spike in defaults and delinquencies as millions of borrowers face loss of income following the
coronavirus lockdown.
That caused an initial rally caused by a global equity bounce to lose steam, making the benchmark indices lose all the gains and end the session lower by nearly 1 per cent.
Top four drags on Nifty50 were lenders. HDFC Bank, the nation’s largest private sector bank, fell 1.2 per cent, top mortgage lender HDFC slipped 2.4 per cent, the nation’s biggest lender SBI eroded 5 per cent, Axis Bank and Kotak Bank 3 per cent each. ICICI Bank gave up 2 per cent.
The BSE Banking index fell 2.39%. Axis Bank’s recent financial results underscored “high levels of stress and uncertainty across the Indian banking system” says S&P. . “The negative outlook on Axis Bank reflects our view that the economic risks for the bank, and the Indian economy at large, remain high,” it said.
“The market saw profit booking post 2 pm and ended lower for the second consecutive day on Tuesday.
Financials, auto and materials stocks came under selling pressure,” said Deepak Jasani, Head of Retail Research at HDFC Securities.
Key facts
- Before closing 0.95 per cent or 88 points down at 9,205, the 50-share Nifty index shuttled between a high and low of 9,451 and 9,192. The index opened the day at 9,206 against the previous close of 9,294.
- Likewise, the 30-share Sensex declined 0.83 per cent or 262 points to close at 31,454, led lower by losses in bank and FMCG counters.
- Global markets traded on a strong note. Hong Kong shares ended 1.08 per cent higher. European markets were also trading firm as a jump in shares of French energy major Total and a slew of positive earnings reports added to optimism over easing of lockdowns by major economies.
Key market statistics
- Market breadth favoured the bears with losers outpacing gainers in the ratio of 1.7:1 on the BSE.
- India VIX or the volatility index eased marginally by 0.93 per cent to 43.26.
- Broader markets also reversed gains, in line with benchmark, with BSE Midcap and BSE Smallcap indices falling 0.97 per cent each.
- BSE Power outpaced other sectoral indices, rising 1.27 per cent to 1,465. CEC, Power Grid, KEC, Adani Power, NTPC and Tata Power gained between 1 per cent and 4 per cent.
- A total of 21 Sensex stocks closed in the red. Country’s biggest lender by assets SBI was the biggest loser with a 4.64 per cent fall. Bajaj Finance, Asian Paints and Axis Bank also declined over 3 per cent.
- Shares of SBI Life Insurance ended 3.99 per cent higher at Rs 715.65 on the BSE after the firm posted a 16 per cent year-on-year rise in net profit for the quarter ended March 2020.
What are the experts saying
- "Markets traded volatile with benchmark indices closing in the red. Losses were led by financials. Markets are trading uncertain regarding the impact of lockdown measures and their effect on earnings. Investors are advised to trade cautiously tracking the global markets and stock specific earnings commentary,” said Vinod Nair, Head of Research at Geojit Financial Services.
- “Indian indices witnessed profit booking post 2 pm and ended lower for the second consecutive day on Tuesday. Further downsides are likely once the immediate support of 9,191 is broken towards 8,909. Any pullback rallies could find resistance at 9,396,” said Deepak Jasani, Head Retail Research, HDFC Securities said.
- “It is prudent to maintain a “bottom-up” approach and use correction to accumulate quality names in a staggered manner. On the other hand, traders should align their position according to the market trend,” said Ajit Mishra, VP-Research, Religare Broking.
What to watch out for?
- Market participants are also worried about trade tensions returning as the US and China fight over the origin of the coronavirus outbreak.