Banks stocks led the sharp fall in the indices on Friday, as the broader market felt the aftermath of the Hindenburg report on the Adani Group. The Nifty Bank index closed 3.1% lower at 40,345.30 points, its lowest since October 20, 2022. Bank of Baroda was the biggest loser in the Nifty Bank index, falling 7.4%.
The benchmark Nifty50 index fell 1.6% to a three-month low. The BSE Sensex tanked 874.16 points or 1.45%, its biggest single day slide in more than a month, to settle at 59,330.90. During the day, it plunged 1,230.36 points or 2.04% to 58,974.70.
Five banks featured among the top 10 biggest losers on the Nifty 50 index. These include bellwethers State Bank of India, ICICI Bank, IndusInd Bank, Kotak Mahindra Bank and Axis Bank.
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“The group (Adani Group) has high debt, which is dampening sentiments on the banking space; therefore, we are seeing a sharp sell-off in banking stocks, especially in PSU names,” Santosh Meena, head of research, Swastika Investmart said.
Earlier this week, Hindenburg Research detailed several allegations against Adani Group companies saying that the group has “engaged in brazen stock manipulation and accounting fraud scheme over the course of decades.”
Investor wealth has eroded by more than Rs 10.73 trillion in the last two trading sessions since the details of the Hindenburg report came out.
Even as the Adani Group has rejected these allegations in two separate statements, its Rs 2.1-trillion consolidated debt, and the exposure of banks to the group entities made investors jittery, say market participants. In a report dated January 26, brokerage CLSA pegged banks’ exposure at less than 40% of the Adani Group’s total debt.
“There are multiple fears. It is not only the Adani Group that caused the market correction, the market cycle has changed T+2 to T+1 from today. Due to the change in the system, there is some selling. The Budget is around the corner and market talks are that the finance minister might tweak some long-term capital gains which is leading additional pressure on the bourses,” Prabhakar A K, head of research, IDBI Capital said.
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The transition from T+2 to T+1 was initiated on Friday. Under the new regulations, all trades will be settled within a day. This includes SME shares, ETFs, Reits, Invits, Sovereign Gold Bonds, Government Bonds and Corporate Bonds trading in the equity segment.
Foreign institutional investors sold shares worth Rs 5,978 crore on Friday while domestic institutional investors bought shares worth Rs 4,252 crore.
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