Sensex falls 180 points on profit-taking; banks slump

By Abhishek Vishnoi

MUMBAI (Reuters) - Profit-taking in blue-chips such as ICICI Bank hit shares on Tuesday, reversing some of the previous session's gains on doubts about how quickly the Iranian nuclear accord would translate into higher supplies that pressure oil prices.

Lenders, who had been among the leading gainers on Monday, also fell after Standard & Poor's downgraded state-run IDBI Bank , sparking worries about more downgrades in the sector.

Caution also prevailed ahead of the expiry of November derivatives contracts on Thursday and July-September gross domestic product data on Friday.

"Valuations are not undemanding anymore and therefore I would be slightly cautious on markets at current levels," said Dipen Shah, head of Private Client Group Research, Kotak Securities.

 

"Upcoming GDP data would re-calibrate estimates but more importantly one should look out for reforms getting executed at ground level," he added.

The broader Nifty fell 0.92 percent, or 56.25 points, to end at 6,059.10, after gaining 2 percent on Monday.

The Sensex fell 0.87 percent, or 180.06 points, to end at 20,425.02.

Banks were among the day's leading decliners, with ICICI Bank down 2.9 percent after gaining 5.3 percent on Monday. HDFC Bank ended 1 percent lower.

IDBI Bank fell 1.5 percent after S&P downgraded the lender's rating to below investment grade citing expectations for weaker asset quality.

IDBI's offshore debt tumbled, with the yield on 2019 bonds widening 30 basis points.

Shares in other state-run lenders also fell, with their dollar-denominated bonds tumbling as well. State Bank of India ended 1.2 percent lower.

State-run oil companies fell on profit taking, with Hindustan Petroleum Corp ending down 4.7 percent after surging 5.7 percent on Monday.

Indian Oil Corp fell 2.4 percent while Bharat Petroleum Corp ended 6.5 percent lower.

Shares that will be excluded from MSCI indices, starting on Wednesday, also tumbled on the last day when investors could sell the shares.

Bank of India fell 5.2 percent while Canara Bank ended 5.8 percent lower. Both will be excluded from MSCI India index after the close of markets on Tuesday..

Among other MSCI exclusions, Wockhardt fell 4.3 percent while Unitech slumped 8 percent.

However, Yes Bank Ltd rose 3.2 percent ahead of its inclusion in MSCI India index.

(Editing by Sunil Nair)