After a break of a day, stocks from the financial sector once again rocked sentiments on Dalal Street. Results from mid-sized private banks showed that those who have a high exposure to commercial real estate financing were still under stress. This led to another round of drop in stock price of home financiers.
Shares of PNB housing finance was the top loser with a decline of 12.87 per cent closing at Rs 380. The quarterly results from public sector housing major showed that disbursement were down sharply by 34.9 per cent on quarter-on-quarter basis and 40 percent on year-on-year basis. If a public sector enterprise, which has no issue about funding, shows a sharp fall, performance of housing companies from the private sector are bound to come under pressure on disbursements.
The broader market indices, though, ended Wednesday trade marginally in the green. NSE’s Nifty was up 43.25 points or 0.38 per cent at 11,471.55 while BSE’s Sensex closed at 38,558.64 up 52.55 points or 0.14 per cent. Both had moved in and out of the red territory during the day. Bank Nifty, which had been a pain point for the markets lost 11 points to closed at 28,543. The breadth in the banking sector indicates that the markets would be specific in punishing stocks rather than just throwing out all of them when bad news strikes.
As the earning season picks up pace, the next few sessions on the markets would be volatile. This expected volatility would see a spike when large PSU banks start releasing their result because their balance sheets are also indicators of many other sectors to which they have exposure. A positive comment about a particular sector would attract investors into stocks in that sector.
Meanwhile, auto stocks, which were gainers on Tuesday’s trading session, came under mild profit- booking, though some of them still managed to stay in the green. This bullish mood for autos was largely on the back of the buzz on the street that vehicles’ scrappage policy would be announced soon, giving a push to sagging auto sales, especially in the commercial vehicles segment.
On Thursday, expiry of weekly contracts is likely to bring in short term spike in volatility, both in the Nifty and the Bank Nifty
(Shilpa Nagpal is an analyst at Market Wizards Securities Pvt Ltd)