Sensex, Nifty nosedive to end down; operators flee banks

Moneycontrol Bureau

Key equity benchmarks close slightly down, but way off the intra-day highs which saw the Sensex touching levels last seen 20 months and 23 months ago, respectively.

Widening of trade deficit in November accelerated the slide noon onwards, and operators dumped their long positions in banking stocks after the Lok Sabha was adjourned for the day.

The Sensex ended the day at 19387.14, down 22.55 points after hitting a high of 19,612.18, and the Nifty fell from the day’s high of 5,965.15 to close at 5898.80, down 10.10 points over its previous close.

Lot of speculative positions had been built up in banking shares yesterday on hopes that the Banking Laws Amendment Bill would be passed today. Brokers said traders unwound their positions in a hurry, not wanting to carry them forward because of uncertainty if the Bill would be passed at all.

Among key losers, State Bank of Travancore, Vijaya Bank, State Bank of Mysore, Oriental Bank of Commerce, Dhanlaxmi Bank, Karnataka Bank and South Indian Bank were down 4-6%. These stocks had risen sharply on Monday as the Banking Bill was being debated.

In sectorwise performance, FMCG shares did well, while shares in the power and realty sectors took a beating

Among frontline gainers, HDFC, Bajaj Auto, Hindustan Unilever and Sun Pharma rose between 1-2%.

Adding to the bearish mood today was data showing India’s trade deficit—exports minus imports—at USD 19.5 for November, despite a slowdown in gold imports and a slight moderation in oil imports.

Exports declined 4.2 percent year-on-year in November, compared to 1.6 percent decline last month, the seventh straight month of decline.

The Sensex has rallied over 1000 points in less than a month, and indices are up 25% for the calendar so far, as investors are anticipating a turnaround in the economy and corporate earnings. And while macro-indicators are not showing any encouraging signs, strong foreign liquidity has been pushing share prices higher.