Market Pulse - 24 Jul, 2013

Markets closed down by over 1%, snapping its five-day winning streak, amid a sell-off in banking sector shares after the Reserve Bank of India (RBI) late Tuesday imposed fresh restrictions on commercial banks' access to cash. The Sensex ended down 211 points at 20,091 and the Nifty slipped 87 points to close at 5,991.

The Bankex was the top loser among the sectoral indices on the BSE, down 4.6% followed by Capital Goods, Metal, COnsumer Durables, Power, Auto and FMCG indices. In the broader market, the BSE Mid-cap and Small-cap indices ended down 1.4-1.8% each.

Allahabad Bank, Corporation Bank, Dena Bank, Federal Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab and Sind Bank, Union Bank of India and Untied Bank of India are quoting at their 52-week lows. Most of these banks ended down 3-8.5%, among private banks ICICI Bank, HDFC Bank and HDFC ended down 3-3.7% each while Yes Bank, IndusInd Bank and Kotak Mahindra Bank ended down 5-12% each. Other losers include Hindustan Unilever, L&T and Mahindra & Mahaindra.

Banking shares were hammered which including State Bank of India (SBI), Punjab National Bank, Canara Bank and Bank of India ended down 3-8% after the Reserve Bank of India (RBI) imposed more measures to tighten liquidity to stabilize Indian rupee.

On Tuesday, the RBI has capped the total quantum of funds available under liquidity adjustment facility (LAF) to 0.5% (lowered from 1%) of individual bank’s net deposits and time liabilities (NDTL), which would be effective from July 24, 2013. The earlier imposed cap on overall allocation of funds at Rs 75,000 crore under LAF stands withdrawn. It has also increased the requirement of minimum daily cash reserve ratio (CRR) maintenance to 99% from 70%, which would be effective from first day of fortnight beginning July 27, 2013.

Market breadth was weak with 1,525 declines and 773 advances on the BSE.