MUMBAI: The equity markets slumped sharply on Friday as the political upheaval in Parliament along with reports about public sector banks planning to tighten corporate loans above certain limits triggered heavy selling in frontline stocks.
On the global front, concerns regarding the imposition of higher tariffs for Indian exports to US also weighed on investors sentiments.
The Sensex fell 509.54 points or 1.51 per cent to end the day at 33,176 while the Nifty dropped 165 points or 1.59 per cent to end the session at 10,195.15.
Sentiments remained subdued after TDP, walked out of the BJP-led NDA over the Centre’s refusal to grant special category status to AP.
While it will not impact the political stability at the centre, the markets see this development as a big blow to the BJP led NDA ahead of the 2019 elections especially in the backdrop of BJP suffering a big defeat in the recently held bypolls in UP.
“Global headwinds are negative and will decide the direction of the markets in the short term. A massive line-up of IPOs and the disinvestment plans of the government will keep the liquidity tight and further create pressure on the stocks in the secondary market. Additionally a subdued performance by BJP in UP bypolls will also have some more side effects,” said Jimeet Modi, founder and CEO, Samco Securities.
According to the data available with the stock exchanges, FPIs sold shares worth '150 crore while DIIs offloaded equities worth '770.53 crore.
Markets participants are also worried about tightening of credit to industry in the wake of massive fraud at PNB.
Report suggests that PSBs are planning to discourage multiple banking arrangements and move towards consortium lending for loan above '250 crore. The proposal comes close on the heels of RBI banning the issue of LOUs or LOCs by banks. On Friday, the broader markets remained extremely weak with 1,835 stocks traded on the BSE trading deep in the red as compared to 859 stocks that advanced.
