Business Other News 07 Mar 2018 Markets slump as pro ...

Markets slump as probe widens

DECCAN CHRONICLE. | DECCAN CHRONICLE
Published Mar 7, 2018, 1:17 am IST
Updated Mar 7, 2018, 1:17 am IST
Minor developments are being amplified due to global sentiments being skittish, says analyst
About 16 public sector banks had reported losses worth Rs 18,947 crore during this period.
 About 16 public sector banks had reported losses worth Rs 18,947 crore during this period.

MUMBAI: The equity markets slumped sharply on Tuesday dragged down by heavy selling in both public as well as private sector banks after Serious Fraud Investigation office (SFIO) summoned ICICI Bank’s CEO Chanda Kochhar and Axis Bank CEO Shikha Sharma in connection with the PNB loan scam. 

According to sources, SFIO has summoned the top management of about 31 banks that were apart of a consortium that advanced loans to Gitanjali Gems promoted by Mehul Choksi. 

After opening the day higher, the markets failed to maintain their positive momentum as cautious investors booked profits at higher levels that led to both Nifty and Sensex breaching some of its key psychological support levels. 

The Nifty closed the day at 10,249.25, down 109.60 points while the Sensex ended the day at 33,317.20, down 429.58 points. 

“There is still fear that more accounts could come under scrutiny and fresh NPAs may emerge in the coming days. With banks coming under greater scrutiny in the wake of the PNB fraud, another concern that is emerging is with reads to a slowdown in fresh lending that could impact banks loan growth especially at a time when they have to incur treasury losses due to spike in 
G-Sec yields,” said Sidharth Purohit, research analyst at SMC Institutional equities.   

The PSU bank index fell to a 52-week low on Tuesday after the shares of Allahabad Bank, Bank of Baroda, Union Bank, Canara Bank and BOI slumped to their 52-week low. 

While SBI lost 3 per cent, the shares of ICICI Bank and Axis bank dropped 2.64 per cent and 1.31 per cent respectively. 

“Global sentiment is a bit skittish at the moment due to which each and every minor developments are being amplified with a negative connotation. What we saw today was a knee jerk unwarranted reaction by the market. Once a semblance of sanity returns, the markets would realise value in some of the beaten down stocks,” said Ajay Bodke, CEO, PMS at Prabhudas Lilladher.

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