Sensex settles 267 points lower, Nifty below 9,300 as banking stocks dip

The benchmark indices settled lower on Friday as banking stocks dipped after the government notified the Banking Regulation (Amendment) Ordinance, 2017, while a drop in crude prices dragged down oil explorers such as ONGC and Oil India.

The S&P BSE Sensex ended at 29,858, down 267 points, while the broader Nifty50 closed at 9,285, down 75 points. The Nifty50 index reversed course seconds after hitting its fresh all-time high of 9,367 in early trade.  

India VIX, essentially a fear gauge, closed the day at 11.98, rising over 5% from the previous close.

In the broader market, the S&P BSE Midcap and S&P BSE Smallcap indices settled 1% and 0.8% lower, respectively.  

The breadth, indicating the overall health of the market, was significantly weak. On the BSE, 2,005 shares declined and 835 shares rose. A total of 140 shares were unchanged.

"Weaknesses in global market has cast a shadow over the domestic market which influenced investors to take off some profit from the table amid positive corporate results and new stressed assets reforms. Crude price slid while other global macros like US job data, Fed's speech and second round of French election on Sunday has generated volatility which accordingly gives ripple effect to the domestic market," said Vinod Nair, Head of Research, Geojit Financial Services.

Sectors and stocks

Tata Motors was the top Sensex and Nifty loser and declined 3.7% to Rs 420 after the company's British luxury car unit Jaguar Land Rover (JLR) reported a 2.3% fall in retail sales at 40,385 units in April 2017 over April 2016. 

Banking stocks dipped with Nifty PSU Bank index falling 1.7% after the government notified the ordinance that seeks to tackle non-performing loans in the sector. 

Bank of India, Allahabad Bank, Bank of Baroda and Andhra Bank slipped anywhere between 4-5%. 

Oil explorers fell on weaker crude oil prices, with ONGC and Oil India declining nearly 3% each.

But oil refiners and airlines stocks rose with IOC climbing 2% intraday, while Spicejet settled over 4% higher.

Weak oil prices result in higher margins for domestic refiners and airline companies.

Govt notifies banking law amendment

The government notified the Banking Regulation (Amendment) Ordinance 2017, kick-starting a new framework to deal with Rs 6 lakh crore worth of non-performing assets in the Indian banking system.

The ordinance comes into force immediately and enables the Reserve Bank of India (RBI) to direct banks to initiate bankruptcy proceedings of defaulting companies under the Insolvency and Bankruptcy Code. The banking regulator has also been empowered to decide on dealing with toxic assets and instructing banks to act accordingly. The RBI will also set up multiple oversight committees to direct banks and joint-lending forums to deal with the stressed assets. CLICK HERE FOR THE FULL REPORT

Global markets

The European markets were trading mixed. Britain's FTSE 100 was marginally higher, while CAC 40 of France was down 0.16%. Germany's DAX shed 0.3% and the pan-European Stoxx 600 dipped 0.3%.

Asian markets declined for a third consecutive day on Friday as fresh falls in commodities raised concerns about the health of the global economy,

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4% and was trading at its lowest level since April 25 as the fresh falls in commodities raised concerns about the health of the global economy.

(With inputs from Reuters)