Stock markets decline for second day on losses in private banks, weak global trends

The trend in the domestic market remained weak post the RBI monetary policy and the unexpected announcement of reducing cash in the banking system.

Published - August 11, 2023 06:50 pm IST - Mumbai

Benchmark equity indices Sensex and Nifty declined for a second straight day on Friday due to losses in HDFC Bank and ICICI Bank and a negative trend in Asian and European markets.

The trend in the domestic market remained weak post the RBI monetary policy and the unexpected announcement of reducing cash in the banking system.

The 30-share BSE Sensex fell by 365.53 points or 0.56% to settle at 65,322.65. During the day, it tanked 413.57 points or 0.62% to 65,274.61.

The NSE Nifty declined by 114.80 points or 0.59% to end at 19,428.30.

From the Sensex pack, IndusInd Bank, NTPC, Asian Paints, Hindustan Unilever, JSW Steel, Tech Mahindra, Bajaj Finance, Infosys, Wipro, ICICI Bank, Bajaj Finserv, HDFC Bank and Tata Motors were among the major laggards.

HCL Technologies, Power Grid, Titan, Reliance Industries, UltraTech Cement, Tata Steel, State Bank of India and Mahindra & Mahindra were the gainers.

“The domestic market continued to experience selling pressure, with banking stocks extending their decline in reaction to the RBI’s liquidity absorption measures,” said Vinod Nair, Head of Research at Geojit Financial Services.

“The escalating concerns about inflation further weighed on domestic market sentiments. Despite the U.S. CPI coming in lower-than-expected and the UK GDP beating estimates, global sentiment remained unfavourable,” Nair added.

The Reserve Bank of India (RBI) on Thursday left its key interest rates unchanged for a third straight meeting but signalled tighter policy if food prices continue to drive inflation higher.

The hawkish stance was also reinforced by the unexpected announcement of reducing the cash in the banking system by raising the incremental cash reserve ratio (I-CRR) to 10% on the incremental NDTL (net demand and time liabilities) over the last three months.

This will help in absorbing a large part of the excess liquidity created through the return of the ₹2,000 notes and the large dividend to the government from RBI.

In Asian markets, Seoul, Shanghai and Hong Kong ended lower.

European markets were trading in negative territory. The US markets ended with gains on Thursday.

Foreign institutional investors (FIIs) were buyers on Thursday as they bought equities worth ₹331.22 crore, according to exchange data.

Global oil benchmark Brent crude declined 0.57% to $$85.91 a barrel.

The BSE benchmark fell 307.63 points or 0.47% to settle at 65,688.18 on Thursday. The Nifty declined 89.45 points or 0.46% to end at 19,543.10.

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