Stocks snapped a three-day winning streak on concerns that more global banks will need bailouts as recession deepens.
Britain's largest bank, the Royal Bank of Scotland Group (RBS), said that it expects to post a loss of £28 billion ($40 billion), the biggest in its history. There are also fears that HSBC will be forced to raise fresh capital as credit losses mount and earnings weaken.
There was selling across the board with stocks like Tata Steel, Unitech, Reliance Communications and ICICI Bank leading the fall. ICICI Bank, the nation’s second-largest bank, and HDFC Bank, the third-biggest, both declined the most in more than a month. The power sector bucked the trend on hopes that companies will benefit after India's electricity regulator issued new regulations to attract further investments in the domestic power sector.
The Bombay Stock Exchange Sensitive Index, or Sensex, fell sharply by 229.02 points to close at 9,100.55. The S&P CNX Nifty closed at 2796.60, down 112.70 points.
| SENSEX DOWN 229 POINTS | ||
| Jan 20, ’09 | % Chg* | |
| LOSERS | ||
| Tata Steel | 195.00 | -6.34 |
| Bharti Airtel | 615.35 | -4.88 |
| Sterlite Ind | 257.80 | -4.75 |
| R-Com | 176.35 | -4.65 |
| Jaiprakash | 66.35 | -4.12 |
| HDFC | 1483.30 | -4.09 |
| Hindalco | 48.70 | -4.04 |
| Reliance Ind | 1182.40 | -3.84 |
| ICICI Bank | 397.30 | -3.81 |
| Jan 20, ’09 | % Chg* | |
| GAINERS | ||
| NTPC | 185.7 | 4.27 |
| Reliance Infra | 552.00 | 3.16 |
| Tata Power | 769.95 | 1.04 |
| *Change over previous day's close | ||
Other Asian markets also closed weak with Hang Seng and Kospi down by 2.85 per cent and 2.07 per cent, respectively.
Gaurav Dua , head (research), Sharekhan, a brokerage firm, said that the bad news of RBS and HSBC had adversely impacted the overall sentiment, especially the banking sector.
The market breadth was fairly negative out of 2,455 stocks traded, 1018 advanced and 1,342 declined. Among sectoral indices, metals were down 3.76 pr cent, bankex by 3.11 per cent, auto by 2.59 per cent and oil and gas by 2.47 per cent. The power index was marginally up by 1.44 per cent., Public Sector Undertakings by 0.33 per cent.