Putting an end to a volatile session, the markets closed the day in the red. The key benchmark index, Sensex lost 62 points to end at 20,498 and the Nifty shed 11 points at 6,146. In the broader markets, the midcaps shed 0.2% and the smallcaps ended flat at 9,841. In comparison, the Sensex underperformed the broader markets at 0.3%.
The markets had earlier opened in the green but quickly pared its gains to slip into the red due to the slump in the banking stocks. Moving ahead the Sensex almost recovered only to slip to touch a low of 20,449. Later, in the afternoon trades, the Sensex finally broke into the green as Reliace moved ahead and Infosys registered a new all time high. However, in the last of the trading, the benchmark index lost its steam.
On the other hand, the Asian markets opened higher for the day on the back of encouraging US data suggesting a recovery in the world's biggest economy. Finally, at the close Taiwan Weighted was the only index to close in the red, shedding 0.3%. Meanwhile, Shanghai Composite, KLSE Composite and Nikkei gained 1% each followed by Jakarta Composite, Straits Times and Seoul Composite gaining 0.6% - 0.7%.
On the European front, the markets had a mixed opening. FTSE gained 1.5% while CAC and DAX aretrading flat.
Among the BSE sectoral indices, FMCG and Oil & Gas up 1% each were the main gainers. Health Care, Power and IT were the only other sectors in the positive. Bankex, down 2% followed by Realty, Consumer Durables were the draggers in today's trades.
Banking sector was under pressure for the major part of the day. Of late, banks have hiked the deposit rates across maturities, while kept review of lending rates on hold.
Arun Kejriwal, Founder, Kejriwal Research and Investment Services says, "Banks have raised BPLR rates and the Reserve Bank of India (RBI) wants to narrow the spread which the banks earn to bring down inflation. Hence, banks’ bottomline will get hit.There is also a concern that the quality of assets has deteriorated in last couple of quarters and there could be some pressure on the banking system due to this. Going ahead, I expect higher provisioning and the balance sheet may also take a hit due to rising non-performing assets (NPAs)"
The losers in the banking space were Indusind Bank, ICICI Bank and SBI down 3% each followed byYes Bank, Union Bank,Bank of India, Federal Bank, Canara Bank and HDFC Bank shed 2% each.
The top gainers on the Sensex were Hindustan Unilever, RIL up 2% each followed by ITC, Reliance Infrastructure, Cipla, Jindal Steel and NTPC added 1% each.
On the losers list were ICICI Bank, Bajaj Auto and SBI down 3% each. Reliance Communications, HDFC Bank,TCS, DLF, Tata Steel, Bharti Airtel and Hindalco shed 1% - 2.5%
The market breadth for the day was negative. Of the total 3049 stocks traded on the BSE, 1481 stocks had declined while 1423 had advanced.