Sensex falls 188 points, Nifty settles below 19,750; Tata Investment jumps 20%

Domestic equity markets settled lower on Friday amid the selling pressure in the banking and financial stocks after RBI's decision. However, buying in defensive counters like pharma, healthcare and FCMG along with auto supported the market sentiments at Dalal Street.

For the day, BSE's Sensex dropped 187.75 points, or 0.28 per cent, to end at 65,794.73. NSE's Nifty50 shed 33.40 points, or 0.17 per cent, to end the day at 19,731.80. Broader markets outperformed the headline indices. BSE midcap index rose more than a per cent, while the BSE smallcap index added one-third a per cent. Fear gauge India VIX spiked about 2 per cent to 11.83-mark.

Nifty closed on a negative note, but most sectoral indices closed in the green. Nifty PSU Bank and Nifty Bank fueled pessimism in the market. RBI's decision to place a higher risk weight on credit card and unsecured loans would immediately raise banks/NBFCs' capital requirements, which will raise capital costs, said Vaibhav Vidwani, Research Analyst, Bonanza Portfolio.

"Banks may readily pass on the higher cost to borrowers since there is a strong demand for credit in some categories, such as unsecured retail loans. As a result, borrowers' cost of credit will slightly increase. The effect on financial institution profits will be insignificant. This is a wise choice in terms of macro financial stability," he said.

On the sectoral front, the Nifty PSU Bank index dropped more than 2 per cent for the day, while the Nifty private bank, financial services and oil & gas indices dropped a per cent each. Among the gains, the Nifty pharma and healthcare indices gained more than a per cent each. The Nifty FMCG and auto indices added about a per cent each.

In the Nifty 50 pack, State Bank of India tanked about 4 per cent, while Axis Bank dropped more than 3 per cent. ONGC, Bharat Petroleum, Bajaj Finance and ICICI Bank fell 2 per cent each. Among the gainers, SBI Life Insurance Company gained about 4 per cent, while Apollo Hospitals and HDFC Life Insurance added 3 per cent each. Larsen & Toubro and Tata Consumer shed 2 per cent each.

The RBI's action to raise risk weights for unsecured loans dampened banking stocks and caused a temporary disruption in the broader indices' resurgence. Despite this, a positive undercurrent prevails, buoyed by the conclusion of a robust earnings season, said Vinod Nair, Head of Research at Geojit Financial Services.

"Investors are awaiting eurozone inflation data later today, which is expected to show a softening trend. Sharp drop in oil prices, and the moderation of US yield will help the market to sustain buoyancy, in the short-term," he said.

A total of 3,864 shares were traded on BSE on Friday, of which 2,007 settled with gains. 1,723 stocks ended the session with cuts while 134 shares remained unchanged. During the day, 393 shares hit their upper circuit, whereas 164 shares tested the lower circuit levels for the day.

In the broader markets, Tata Investment Corporation and GE Power India hit an upper circuit of 20 per cent each, while AGS Transact Technologies gained more than 18 per cent. Varroc Engineering gained more than 17 per cent, while Titagarh Rail Systems gained more than 16 per cent for the day.

RBL Bank dropped more than 7 per cent after RBI's tightening, while Satin Creditcare Network, Sportking India, Jaiprakash Associates, Aditya Birla Capital and L&T Finance Holdings dropped 6 per cent each. Kovai Medical Center, Centrum Capital, SBI Cards and Payments and Ujjivan Financial Services dropped 5 per cent each for the day.

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