Benchmark indices rallied more than 1 percent intraday Thursday following positive lead from global peers, but trimmed gains in later part of the session to end with 0.4 percent gains amid volatility due to PNB controversy.
The 30-share BSE Sensex rallied 379 points intraday, before ending up 141.52 points at 34,297.47. The 50-share NSE Nifty failed to hold 10,600 levels touched intraday, closing up 44.60 points at 10,545.50.
The broader markets underperformed equity benchmarks, snapping 6-day winning streak post earnings season. The Nifty Midcap and BSE Smallcap indices lost a percent each.
“Markets have been struggling in a broader range for last six sessions and it shows indecisiveness among the participants. The government along with apex bank is trying every step to resolve issues in public sector banks but some negative news comes in every now and then, derailing the recovery. Trading becomes very difficult in such scenario due to erratic swings,” Jayant Manglik, President, Religare Broking said.
He suggests keeping a close watch on global markets for cues and limiting leveraged positions until some clarity emerges.
PSU Bank was the biggest loser among sectoral indices, falling 1.1 percent as the crash in Punjab National Bank post transaction fraud spoiled the party.
PNB shares lost another 13 percent after detecting transaction fraud of Rs 11,333 crore in a Mumbai branch. The stock lost 22 percent and more than Rs 8,000 crore in market capitalisation in two consecutive sessions after clarification from the management.
While addressing press conference post fraud, Sunil Mehta, MD & CEO of the bank said the bank was trying its best to take action against alleged offenders and requested for some time for all disclosures. “We have initiated recovery process in fraud case and are hopeful for good recovery. Nirav Modi has written to us on a repayment plan.”
Bank of Baroda, IDBI Bank, Syndicate Bank, Indian Bank, Allahabad Bank and Union Bank were down 1-4 percent while SBI gained 1 percent.
Among private banks, only ICICI Bank rallied 3 percent while others ended in the red.
Jewellery firm Gitanjali Gems and Nirav Modi Group companies are involved in the transaction fraud. Gitanjali Gems was locked at 20 percent lower circuit and the ripple effect was also seen in other jewellery stocks – PC Jeweller, Rajesh Exports, SRS, Tara Jewels and Thangamayil fell 2-5 percent.moneycontrol