Sensex tanks 523 pts on profit taking in banking, metal shares

Mumbai: Benchmark Sensex plunged by 523 points on Monday due to profit-taking in metal and banking shares amid mixed trends in global markets.

The 30-share BSE Sensex settled 523 points or 0.73 per cent lower at 71,072.49 as 22 of its components closed in the red and eight in the green. The barometer opened higher and touched a high of 71,756.58 in early trade.

However, profit-taking in Reliance Industries, metal giants and banking shares dragged the index to a low of 70,922.57 during intra-day trade.

The broader NSE Nifty also closed 166.45 points or 0.76 per cent lower at 21,616.05 with 34 of its constituents ending in the red.

Metal, banking and select oil shares succumbed to selling while pharma and IT shares bucked the trend.

"An uptick in exchange margin requirements caused a decrease in positions, primarily in mid and small caps. Aside from the pharma and IT sectors, selling was widespread, with notable struggles seen in PSU banks," Vinod Nair, Head of Research, Geojit Financial Services said.

In the Sensex pack, Tata Steel fell the most by 2.76 per cent, followed by NTPC (2.72 per cent) and SBI (2.26 per cent). Private banks IndusInd, Kotak Bank, HDFC Bank and ICICI Bank also declined.

In contrast, Wipro, HCL Tech, Mahindra & Mahindra and Nestle were among the nine Sensex stocks that defied the trend.

BSE smallcap index fell 3.16 per cent while midcap lost 2.62 per cent and largecap closed 0.90 per cent lower.

Among the sectoral indices, utilities saw a steepest fall of 3.60 per cent, followed by realty which declined by 3.01 per cent and power that went down by 2.90 per cent. Industrials fell 2.92 per cent and energy slid 2.80 per cent, while metal declined by 2.73 per cent and oil & gas by 2.56 per cent.

Capital goods, commodities, bankex and financial services were other laggards.

"The premium valuation gap between mid to large caps has notched to its all-time high. Despite a robust economic forecast, corporate earnings are expected to slow due to moderated operating margins. It is going to be a challenge for the broad market to sustain the premium valuation," Nair added.

In the broader market, NHPC dropped 15.81 per cent after it reported a 19 per cent decline in profit for the December quarter. Another power PSU SJVN dropped 20 per cent to hit the lower circuit on BSE.

Leading forging manufacturer Bharat Forge tanked 14.04 per cent following the announcement of its quarterly results.

"Nifty declined further after a consolidation breakdown on the hourly chart, indicating an increase in pessimism. The daily chart shows the index forming a lower top, signalling diminishing bullish sentiment," Rupak De, Senior Technical Analyst, LKP Securities said.

In Asia, Tokyo's Nikkei 225 closed 0.9 per cent higher and China's Shanghai Composite went up 1.28 per cent. Hong Kong's Hang Seng fell 0.83 per cent.

European markets were trading on a mixed note with CAC 40 of France and DAX of Germany rising, while London's FTSE 100 trading with losses.

Global oil benchmark Brent crude declined 0.50 per cent to USD 81.78 a barrel on Monday.

Foreign Institutional Investors (FIIs) purchased shares worth Rs 141.95 crore on Friday, according to exchange data.

On Friday, Sensex climbed 167.06 points or 0.23 per cent to settle at 71,595.49 points while the Nifty gained 64.55 points or 0.30 per cent to close at 21,782.50 points.