Sensex takes 499 points plunge amid sell-off in banking shares

The markets witnessed heavy institutional selling on Friday after ten successive sessions of a bull run that began on January 15.

The BSE Sensex, lost 1.68% or 498.82 points and NSE Nifty fell 1.60% or 143.45 points to close at 29182.95 and 8808.90, respectively on the last trading day of the week.

Banking sector stocks led the fall with Bankex shedding 3.4% to 22715.52. Another major reason, market players said was the Coal India's `offer for sale' that got fully subscribed on the first day itself.

The mega issue that opened Friday at floor price of Rs 358 helped the government garner Rs 22,600 crore, said markets players.

"We had a ten-day long sharp rally, supported by long positions build in derivatives. Post the expiry the market hasn't got any follow up buying support," said Kunj Bansal, head of research, Centrum Broking.

The next trigger for the markets will be the monetary policy review of February 3. Most market players believe the Reserve Bank of India will keep key repo rate unchanged at 7.75% but the market will wait for a direction till then.

In the medium term, Vinod Nair, Head Fundamental Research, Geojit BNP Paribas Financial Services Ltd. expects, a possibility of the uptrend to shift from large caps to mid caps in the next two to three quarters."

Institutional investors on Friday were big-time subscribers of the CIL issue, they said. The stock in secondary trades closed 4% lower at Rs 360.50. Foreign institutional investors and domestic institutional investors sold shares worth Rs 771.55 crore and Rs 37.60 crore respectively.

Among the major stocks that led the fall were Bank of Baroda (11.49%), SBI (5.41%), ICICI (5.27%) and PNB(4.95%), while gainers were HCL Tech (8.82%) and Tata Power (3.69%). Of the 50 stocks on the Nifty, 34 stocks declined while 16 advanced.

Quarterly performances of Bank of Baroda (BoB) and ICICI Bank fell below market estimates with net profits dipping 68% YoY and a 14% YoY growth for the latter.

HCL Tech numbers were above street estimates with a net profit growth of 2.3% and a dollar-revenue growth of 4%.

Prashant Prabhakaran, president, IIFL expects the market to be volatile with an upward bias in the medium term.