Sensex drops most in a month on GST jitters; bank scrips melt

Mumbai: A correction-bound BSE Sensex logged its biggest fall in a month, slipping below the 31,000 mark and plunging by 180 points to end at 30,958.25, as banking and PSU stocks led the decline amid lacklustre global cues and jitters ahead of GST rollout.

The gauge had fallen 205.72 points on May 23.

The NSE Nifty ended 63.55 points lower, or 0.66 percent, at 9,511.40. Intra-day, it cracked below the 9,500-mark to touch a low of 9,473.45 and hit a high of 9,615.40.

Sentiments took a beating as banking stocks melted following reports that the RBI has asked banks for higher provisioning for loans submitted under the insolvency process, brokers said.

Investors took to offloading their positions ahead of June expiry in the derivatives segment on Thursday and rollout of GST on July 1.

"RBIs guideline to maintain higher provision against the loans under the insolvency process has impacted the market direction and plunged the market to test the support level of 9500. RBIs action will impact earnings potential for banks and finally impact investor?s expectation for FY18 earnings growth," Vinod Nair, Head of Research, Geojit Financial Services Ltd said.

He added that on the global front, Federal Reserve chief Janet Yellen?s speech today will be eagerly heard to get an insight on the plan to trim the balance sheet and timing of next rate hike.

After opening higher at 31,194.68, advanced to hit the day's high of 31,294.96, the BSE Sensex slipped into the negative zone on profit-booking and touched a low of 30,847.08.

The Sensex finally settled 179.76 points or 0.58 percent lower at 30,958.25, its lowest closing since May 25 when it settled at 30,750.03. It had fallen by 152.53 points on Friday. The stock exchange was shut yesterday on account of 'Id-Ul-Fitr'.

"After an extended weekend, trading began with a marginal gap as indicated by the SGX Nifty. However, a strong selling pressure in the initial hour dragged the index significantly lower to close with a cut of 0.66 percent over its previous close. The banking conglomerates were among the major culprits in today?s weakness. Today?s correction was no surprise as market hinted towards it on Friday," said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking,

The market has been going through a consolidation phase with participants opting to adopt a wait-and-see strategy and kept their investments on hold.

Profit-booking by retail investors dragged down small-cap and mid-cap indices by 1.57 percent and 0.79 percent, respectively.

Shares of the largest state-run sector lender SBI plunged 3.27 percent to Rs 279.40, followed by Axis Bank 2.34 percent to Rs 492.80. ICICI Bank fell 1.20 percent to Rs 288, Kotak Bank lost 1.13 percent to Rs 974.30 and HDFC Bank down 0.63 percent to Rs 1,667.90.

Syndicate Bank, Punjab National Bank, Bank of Baroda, Federal Bank, Vijaya Bank, Canara Bank, Andhra Bank, Allahabad Bank, Corporation Bank and Union Bank too fell by up to 4.97 percent.

Other laggards were Asian Paint, Infosys, L&T, Bajaj Auto, Cipla, TCS, M&M, Maruti Suzuki, Coal India, NTPC, Wipro, Hind Unilever and PowerGrid, dragged down the key benchmark from psychological 31,000-level.

Bucking the trend, Bharti Airtel, ONGC, Hero MotoCorp, Tata Steel, Adani Ports, Lupin and ITC Ltd, ended higher and cushioned the fall.

Among the sectoral indices, bankex fell the most by losing 1.45 percent followed by realty 1.40 percent, PSU 1.32 percent, capital goods 1.20 percent, IT 1.12 percent, teck 0.91 percent, power 0.66 percent, auto 0.63 percent and healthcare 0.28 percent.

Foreign portfolio investors (FPIs) picked up shares worth a net Rs 269.95 crore last Friday, as per provisional data. Domestic institutional investors (DIIs), however, net sold shares worth Rs 45.78 crore.

Globally, European markets were lower after the president of the European Central Bank, Mario Draghi, defended its loose monetary policy and said a premature ending to easing could lead to another recession. Stock markets in France, Germany and the UK fell in early deals.

Asian shares ended mostly mixed with Hong Kong's Hang Seng falling 0.12 percent, while Japan's Nikkei ended higher by 0.36 percent and China's Shanghai Composite gained 0.18 percent.