Snapping its 10-session gaining streak, the Sensex tumbled 264 points on Wednesday to close at 48,174.06 points as investors booked profits in Reliance Industries (RIL) as well as IT, finance and FMCG stocks amid mixed global cues. The Nifty declined by 53.25 points (0.38%) to close at 14,146.25. The Nifty Bank, however, ended with minor gains.
While the markets were dragged by selling in heavyweight stocks such as RIL, select financials and metal stocks witnessed buying. The Nifty Bank gained 0.24% thanks to the buying in heavyweight stocks.
What’s interesting is that due to the recent rally, within a period of 30 days, ICICI Bank has become the third Indian lender to touch all-time highs in terms of market capitalisation (m-cap). ICICI Bank’s m-cap touched Rs 3.77 lakh crore and its stock price intra-day touched Rs 550.55, which was a record high.
On December 17, HDFC Bank touched an all-time high m-cap of Rs 9.74 lakh crore and Kotak Mahindra Bank touched a record high m-cap of Rs 3.99 lakh crore on December 30. However, both HDFC Bank and Kotak Mahindra Bank have lost value since the start of the year, with the m-cap falling by Rs 8,674.53 crore and Rs 4,990.15 crore, respectively. ICICI Bank has gained m-cap of Rs 6,524 crore since the start of the year.
Banking stocks have been rallying ahead of the third quarter results. Brokerages believe that the focus for the third quarter will be on the recognition, provision and recovery of non-performing loans. The recognition of NPLs has been on hold for the past few quarters. Kotak Institutional Equities said, “The recognition, provision and recovery cycle are currently under strain given this breakdown and we expect this issue to dominate conversations this quarter.”
The major gainers on the Nifty were Powergrid Corporation, GAIL, Hindalco, Shree Cement and Bharti Airtel, up 4.15%, 3.56%, 3.5%, 3.36% and 2.76%. The significant losers were ITC, Reliance Industries, Axis Bank, Bajaj Finance, and HCL Technologies, down by 2.91%, 2.57%, 1.94%, 1.92% and 1.55%.
Despite corrections on Wednesday, market valuations remain a concern, since experts believe that the market has now reached expensive valuations and are trading above their fair values.
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