Sensex down 111 points, snaps six-day record run; PSU bank stocks fell up to 7%

Mumbai, Jan 25 (PTI) Benchmark Sensex slipped from life highs to end over 111 points lower at 36,050.44 on Thursday as markets took a breather after six consecutive record-setting sessions.

The broader Nifty also settled 16.35 points, or 0.15 percent down at 11,069.65.

Overall sentiment was cautious as investors were on a wait-and-watch mode ahead of the Union Budget and a long weekend as markets will remain shut tomorrow on account of ‘Republic Day’.

The 30-share Sensex, after rising to 36,247.02 points in early trade, turned negative and cracked below the 36,000-mark to a low of 35,823.35 as participants squared-up positions in view of derivatives expiry amid profit-booking at record levels.

However, it recovered some lost ground on short-covering towards the fag end and settled the day at 36,050.44, still down by 111.20 points, or 0.31 percent.

The gauge had gained 1,390.53 points in the previous six record-setting sessions.

The 50-share Nifty too remained in the negative terrain for the better part of the day and touched a low of 11,009.20, before finally closing 16.35 points, or 0.15 percent, lower at 11,069.65 points.

However, it was the eighth straight week of gains for the markets. During the period, the Sensex scored a rally of 538.86 points, or 1.51 percent, while the broader Nifty gathered 174.95 points, or 1.60 percent.

PSU bank stocks tumble up to 7 percent on recap announcement

PSU bank stocks fell up to 7 percent on profit-booking a day after the government said it will infuse Rs 88,139 crore capital in 20 public sector banks before March 31.

Shares of Punjab National Bank tanked 7.07 percent, Syndicate Bank 6.92 percent, Bank of Baroda 6.09 percent, SBI 4.96 percent and Oriental Bank of Commerce 4.83 percent on BSE.

SBI was the worst hit among the 30-Sensex constituents.

Allahabad Bank fell 3.76 percent, Bank of Maharashtra 2.36 percent, Bank of India 2 percent, United Bank of India 1.11 percent, Central Bank of India 1 percent, Indian Overseas Bank 0.85 percent and Dena Bank 0.19 percent.

“With the bulk of recapitalisation funds going to the banks in the PCA category, PSB heavy weights quickly let go off the recent gains, putting pressure on market sentiment,” said Anand James, Chief Market Strategist, Geojit Financial Services Ltd.

The government on Wednesday said it will infuse an unprecedented Rs 88,139 crore capital in 20 public sector banks (PSBs) before March 31 to boost lending and revive growth. It unveiled steps to tackle the bad loan problem which has reached record levels.

The lenders, which include State Bank of India, account for more than two-thirds of India’s banking assets as well as most of the over Rs 8 lakh crore of non-performing assets (NPAs) or bad loans.

The capital infusion is part of the massive Rs 2.11 lakh crore bank recapitalisation plan announced by the government in October last year. It is spread over two financial years – 2017-18 and 2018-19.

The finance ministry will raise Rs 80,000 crore through recapitalisation bonds, and provide another Rs 8,139 crore from the Budget to recapitalise banks.