Benchmark indices witnessed heavy declines today, with the Sensex losing 700 points intraday. All sectors ended in the red, however, PSU banks, media, and realty stocks were the worst hit.
There is more than one factor souring sentiment in the markets currently. While D-street is currently rife with news and even rumours of debt defaults, the auto sector seems nowhere close to revival even as the festive season approaches.
Here are the key factors that caused the massive fall in the markets today:
1. The fall in Banking & Financial stocks: In today's session, Yes Bank fell to an all-time low of Rs29.05/share intraday, while RBL Bank plunged 15% intraday to hit a fresh low owing to its exposure to Indiabulls Housing Finance.
While Yes Bank has been freefalling since the RBI approved an increase in its authorized share capital, there seems to be no respite to the slide as the bank's stock slumped after its promoter entities sold a part of their stake in the bank today.
RBL Bank plunged owing to concerns regarding its exposure to Indiabulls Housing Finance. The stock ended down 7% even as Vishwavir Ahuja, its Managing Director and CEO, in an interview to CNBC-TV18 said that the bank's exposure to Indiabulls Group is between 0.25% to 0.5% of its total loan book, attributing the today's fall to "malicious speculation."
SBI and Bank of Baroda were particularly hit among PSUs as investors fear their exposure to troubled borrowers such as ADAG companies, Cox & Kings, CG Power, and DHFL.
2. Auto sales remain dismal: The pain for automobile manufacturers seems far from over, even with the festive season drawing closer. From the automakers that have reported September sales so far, only Escorts and Atul Auto have posted positive yoy numbers. Maruti Suzuki, Eicher Motors, SML Isuzu, Ashok Leyland, and Mahindra & Mahindra have all reported massive declines in their September sales.
3. Disappointing macro data: Macroeconomic data also continued to disappoint with the eight core sector growth in August falling 0.5%, the first in over four years. This denotes the overall slowdown in demand. This is also likely to have impacted factory output.