Equity benchmark indices suffered bruising losses on Tuesday in all-round selling led by bank, financial, metal and auto stocks after the government last week reported 5 per cent GDP growth during the first fiscal quarter of April to June.
The government has unveiled various measures to arrest falling growth, right from rolling back of higher tax surcharge from foreign investors to mega reforms in the public sector banking space. However, investors remain cautious due to weak macro-economic indicators amid global trade wars and a gloomy outlook for this year.
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The BSE S & P Sensex closed 770 points lower or 2 per cent at 36,563 while the Nifty 50 edged lower by 225 points to 10,797.
At the National Stock Exchange, all sectoral indices were in the red. Nifty PSU bank dropped by 4.87 per cent to 2,353.80 after Finance Minister Nirmala Sitharaman unveiled a mega-plan last week to merge 10 public sector banks for creating four stronger lenders with countrywide networks and global reach.
Stocks of Punjab National Bank plunged by 8.55 per cent to close at Rs 59.40 per share. Oriental Bank of Commerce edged lower by 9.6 per cent to Rs 66.40 while Canara Bank traded 10.6 per cent lower to trade at Rs 197.20 per share.
Traders said while the development is positive, it will take a long time for the better economies of scale to materialise and face initial profitability pain.
However, IDBI Bank gained by 7.6 per cent after the government announced its recapitalisation with infusion of over Rs 9,000 crore.
Among the other prominent losers were Tata Steel, ICICI Bank, UltraTech Cement, Titan, Indian Oil Corporation and Tata Motos which lost between 4 and 4.5 per cent each. Heavyweight Reliance Industries plunged by 3.8 per cent while Jindal Steel lost by 3.6 per cent.
However, IT stocks like Tech Mahindra and HCL Tech showed some gains.
Meanwhile, Asian stocks drifted in thin trading as investors waited to see if US and Chinese officials can schedule a planned meeting this month to continue trade talks.
Hong Kong’s Hang Seng was down by 0.4 per cent after anti-government protests. South Korea’s KOSPI slipped by 0.18 per cent but Japan’s Nikkei moved up marginally by 0.02 per cent.