Bank stocks savaged

Sensex falls 130 pts a day after credit policy

Banking counters witnessed huge selling pressure on interest rate worries, dragging the overall market and sentiment down on Friday.

The Bombay Stock Exchange (BSE) Sensex crashed to a four-month closing low on selling pressure in blue chips, after the quarterly results of heavyweights Hindustan Lever and Grasim also failed to excite investors, brokers said. In the process, Rs 25,727 crore in investor wealth (market capitalisation) was lost on Friday.

Other Asian markets also closed weak, hurt by lower than expected US gross domestic product figures for the March quarter, analysts added. Volumes were lower as marketmen stayed away from taking buy calls. Lack of institutional buying support was adding to market worries, analysts said.

The BSE index for bank scrips, the BSE Bankex, was the biggest loser among BSE sectoral indices, and was down 2.89 per cent. Oil, consumer durable and metal company counters were among the biggest losers on Friday even as all major BSE indices closed in negative territory.

The BSE Sensex hit a high of 6,288.44 and a low of 6,138.47 in intra-day trades before finally closing at 6,154.44 points, down 129.76 points (2.06 per cent) from its previous close.

Jitendra Panda, vice-president, retail, at Motilal Oswal Securities, the broking firm, said, " Bank stocks saw selling pressure following the RBI's move to hike short-term interest rates in the credit policy. Worries of interest rates hardening hit the market hard on Friday."

The May series futures contracts were trading at a sharp discount to the spot market, also indicating a bearish trend, he added. Oil company stock prices lost ground on reports that there was no immediate move to raise retail petrol and diesel prices, analysts said.

Among frontline counters, 27 of the 30-scrip Sensex basket closed lower. The breadth of the market was negative, with losers outpacing gainers 3:1 on the BSE. Volumes were lower than yesterday, with a turnover of Rs 1,849.91 crore recorded on the BSE and Rs 4,044.46 crore on the NSE.

Foreign institutional investors were net sellers of Indian shares worth Rs 325 crore on Thursday, while domestic mutual funds were net buyers to the tune of Rs 54.50 crore. Foreign fund outflow is weighing on the sentiment, brokers said.

The HPCL scrip was the biggest loser in the Sensex basket, falling 4.79 per cent to close at Rs 302.85, followed by Satyam Computer, down 4.54 per cent to Rs 399.35. The Grasim scrip's price fell 4.20 per cent to Rs 1161.90, Hindalco's share price was down 4.20 per cent to Rs 1,186.40, the Tata Motors share fell 3.99 per cent to Rs 411.90, HLL was down 3.97 per cent to Rs 137.70, ICICI Bank fell 3.97 per cent to Rs 360.20 and the State Bank of India scrip's price fell 3.22 per cent to Rs 584.80.

Other bank counters also witnessed selling pressure. The Union Bank of India scrip's price fell 6 per cent to close at Rs 96.7, Bank of Baroda was down 5.2 per cent to Rs 172.25, Bank of India was down 5 per cent to Rs 81.95, Dena Bank fell 3.5 per cent to Rs 29.3 and Punjab National Bank fell 1.63 per cent to Rs 346.20.

The three Sensex basket gainers included Cipla, up 2.29 per cent to close at Rs 263.70, Zee Telefilms, up 1.35 per cent to Rs 131.35, and HDFC Bank which gained 0.10 per cent to Rs 537.20.