After sixsession rally, markets off record highs
POLICY Govt decision to infuse higher capital in weaker banks affected sentiment
MUMBAI:Indian stock market took a breather after a six-session dizzying rally, with benchmark indices Sensex and Nifty skidding from their closing peaks after emergence of sell-off in recent high-flying counters.
The investor sentiment was majorly driven by under-pressure banking stocks, which had recently seen sharp run-up in valuation, as the market was concerned over government’s move to allocate higher capital to weaker banks.
The Sensex on Thursday fell over 111 points or 0.31%, to close at 36,050.44, and the Nifty concluded the session with a loss of over 16 points or 0.15%, at 11,069.65 points.
On a weekly basis, it was eighth straight week of gains for the markets. During the period, the 30-share Sensex added 538.86 points or 1.51%, while the broader Nifty gathered 174.95 points or 1.60%.
Anand James, chief market strategist, Geojit Financial Services, said: “With the bulk of recapitalisation funds going to the banks in the PCA category, PSB heavy weights quickly let go off the recent gains, putting pressure on market sentiments. Nifty rollover, which was the lowest in 5 months until yesterday, quickly gathered pace putting a lid on upside attempts...”
Among the Sensex constituents, State Bank of India was in red, tumbling the most by about 5% a day after the government said it will inject ₹88,139 crore capital in 20 public sector banks (PSBs) before March.
Other state-run lenders Punjab National Bank and Bank of Baroda also retreated by up to 7.07%. The overall sentiment was cautious as investors were on a wait-and-watch mode ahead of the Union Budget to be unveiled on February 1 and a long weekend as markets will remain shut on Friday on account of Republic Day. Investors were concerned over surging global crude prices which climbed to over three year highs to trade at $71 a barrel too negatively impacted sentiments, traders said.
The Sensex, after rising to 36,247.02 points in early trade, turned negative and cracked the 36,000-mark to hit a low of 35,823.35 as participants indulged in squaring-up their positions in view of expiry amid profit-booking at record levels.
Traders described Thursday’s fall as a technical correction as markets were in an “overbought” position given that stock valuations were stretched, spurred by encouraging quarterly earnings of some bluechip companies and unabated foreign fund inflows.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net ₹776.42 crore, while domestic institutional investors (DIIs) sold shares worth a net ₹193.87 crore on Wednesday, as per provisional data.
Sectorally, the BSE PSU dropped (1.79%) followed by realty (1.52%), auto (1.18%), teck (1.13%), IT index (1.13%), power (1.12%), consumer durables (0.95%), healthcare (0.75%), FMCG (0.53%), Infrastructure (0.37%), oil and gas (0.35%) and bankex (0.11%).
However, metal rose 0.84% and capital goods 0.38%.
The broader markets too faced selling presure as investors locked-in gains at existing levels, pulling down the midcap index 0.75% and smallcap index 0.68%.