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Sensex falls over 300 points, banking stocks plunge

The BSE Sensex came under sharp selling pressure on Wednesday tracking global weakness and weak rupee. The Sensex fell more than 300 points erasing all the gains for the year.

The 50-share Nifty traded well below the key 5,800 mark, while the Indian rupee breached the 60 mark against the dollar. Renewed weakness in the rupee came on account of broad dollar strength.

Asian shares closed with deep cuts, hit by worries that the days of easy money from the U.S. Federal Reserve are numbered.

High beta metal and realty stocks were worst hit as investors booked profits after recent gains. Jaiprakash Associates fell over 7 per cent, while Sesa Goa traded 4.5 per cent lower. Realty major DLF declined 4 per cent.

Banking stocks, which have a large weightage on the benchmark indices, also fell over 2 per cent. Banks fall after RBI issued draft guidelines that would require banks to make higher provisions and increase risk weights on exposure to companies that have unhedged foreign-currency exposure.

State-run Bank of Baroda and Punjab National Bank were among the worst performers on the Nifty. State Bank of India, country's largest lender and ICICI Bank saw strong selling pressure.

Drugmaker Lupin, FMCG major HUL and tobacco major ITC were among the four gainers on Nifty. These stocks are considered to be defensive stocks.

Despite the selloff, experts remained optimistic in their outlook. Market analyst Sarvendra Srivastava said 5,780-5,800 levels should get tested amid Asian weakness, but the overall stance remains bullish.

Gaurang Shah of Geojit BNP Paribas Financial Services said there is pain as far as currency is concerned and earnings will be a shade lower than last time, but maintained that there is inherent value in certain stocks and sectors.

The Sensex traded 1.6 per cent lower at 19,157, while the Nifty traded at 5,764, down 94 points as of 12.19 p.m.

(With inputs from Reuters)