The Indian equity markets were hit on Wednesday by renewed fears of an economic slowdown in the West and China and disappointing December quarter results from banks, in addition to rumours of a collapse at Deutsche Bank.
It was not surprising, then, that key indices touched 52-week lows intraday with domestic benchmarks losing over a percentage on Wednesday, their third straight day of booking losses.
The Sensex closed 262 points lower at 23,758 and the Nifty lost 82 points to close at 7,215. The Bank Nifty, the barometer of sentiment, was battered through the day, closing 1.93 per cent lower at 14,588.45. The broader market lost massively as well, with the S&P BSE 200 closing down 1.15 per cent and BSE MidCap and SmallCap losing 0.95 per cent and 1.42 per cent respectively at the end of the day.
Sectoral indices for PSU banks, realty, media and financial services were the worst hit. Central Bank was the biggest loser on the BSE, closing down 12.37 per cent at ₹54.20. Allahabad Bank, Punjab National Bank and UCO Bank lost over eight percentage points each as well, facing heavy selling after declaring poor December quarter results and rising bad loans. On the Nifty, State Bank of India, Bank of Baroda and Punjab National Bank touched new 52-week lows, as did Tech Mahindra, BHEL and TCS.
Foreign institutional investors were massive sellers on Wednesday, offloading net equity of ₹751.33 crore, while domestic investors are still using these days in the red to buy. Domestic institutions bought net equity of ₹196.92 crore on Thursday while retail investors on the BSE picked up new equity worth ₹81 crore.
The sell-off has made the valuation of Sensex stocks attractive, as they are trading at a PE value of 18.06, the lowest point since May 2014.
“The Nifty has lost close to four per cent this week so far and there’s no sign of respite yet. In addition, we have seen a good amount of selling pressure in quality stocks also,” Jayant Manglik, President, Retail Distribution, Religare Securities Ltd, said in a note.