The benchmark S&P BSE Sensex slid 1..5% on Friday dragged down by banking stocks on investor fears that a short-seller triggered rout in Adani Group stocks could impact lenders with a substantial exposure to the port to commodities conglomerate.
The Sensex fell 874.16 points to 59,330.90, with State Bank of India leading the losses (5.03%), ICICI Bank (4.41%), IndusInd Bank (3.43%), Axis Bank (2.07%) and Kotak Bank (2.03%).
The NSE Nifty-50 index too declined 287.60 points, 1.6%, to 17,604.35.
Several Adani Group stocks hit the 20% lower circuit, while flagship Adani Enterprises, which opened a ₹20,000 crore follow-on public offer on Friday, slumped 18.5% to ₹2,762.15 on the BSE. LIC, which some media reports have said has an exposure of about ₹70,000 crore to the Adani Group, also bore the brunt with the stock sliding 3.45%.
“Despite the optimistic results announced by the blue chips, this week’s market sentiment suddenly got dampened by the unfavourable research report on Asia’s richest promoter Group [Adani] companies,” said Vinod Nair, Head of Research at Geojit Financial Services. “The same is... affecting banking stocks, despite their positive results owing to high group lending; with PSU banks being the most impacted due to high exposure,” he added.
“The market appeared to be uneasy ahead of the upcoming Union Budget and Fed meeting, and Foreign Institutional Investors (FIIs) were selling as funds are being shifted to other emerging markets (EMs) because of [more] attractive valuations,” he said.
“Any increase in funding [in the Budget] towards capital expenditure and rural areas within the constraints of the fiscal deficit controls will be favourable,” Mr. Nair added.
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