Sensex hits one-month low, ends below 31,000

The S&P BSE Midcap and the S&P BSE Smallcap indices under-performed to lose 0.8% and 1.6%

The market hit one-month low on Tuesday with the S&P BSE Sensex ending below its crucial 31,000 level, while the broader Nifty50 settled a tad above its key support of 9,500 level after breaching it in intraday trade.

The losses were ledy by public sector banks, which took a hit following a report that the Reserve Bank of India (RBI) has demanded higher provisioning for loans submitted under the insolvency process.

The 30-share Sensex settled at 30,958, down 180 points, while the Nifty50 ended at 9,510, down 64 points.

In the broader market, the S&P BSE Midcap and the S&P BSE Smallcap indices underperformed to lose 0.8% and 1.6%, respectively.

The breadth, indicating the overall health of the market, was weak. On the BSE, 1,880 shares declined and 722 shares rose. A total of 170 shares were unchanged.

"Long liquidation pressure was strong due to concerns over GST preparedness and approaching derivatives expiry. Banks, which had so far been riding the wave of NPA resolution hopes, were among the heaviest sectoral losers,” said Anand James, Chief Market Strategist, Geojit Financial Services.

Sectors and stocks

Nifty PSU Bank was down 3.4%, led by losses in Syndicate Bank, Punjab National Bank, Canara Bank and Allahabad Bank, which dipped in the range of 4-6%.

Bank of Baroda, Andhra Bank, Oriental Bank and SBI also slipped up to 4% following news report that the RBI has asked banks to set aside at least 50% of the loan amount for accounts referred to bankruptcy courts. The move could hurt banks' earnings to the tune of 500 billion rupees, the report said.

Bank of Baroda (down 4%) was the top loser on Nifty, while SBI (down 3%) shed the most on Sensex.

Shares of Tejas Networks made a quiet debut on the bourses by listing at its initial public offer (IPO) price of Rs 257 on the National Stock Exchange (NSE) and BSE. The stock settled at Rs 263, up 2% against its issue price.

Among other gainers, Aurobindo Pharma climbed as much as 3% to its highest since March 24 after Jefferies analysts raised price target on the stock to Rs 780 from Rs 750 and maintained their "buy" rating on the stock.

Shares of Jaypee Group companies such as Jaiprakash Associates, Jaypee Infratech and Jaiprakash Power Ventures rallied up to 20% in an otherwise subdued market.

Jaypee Infratech was locked in upper circuit of 20% at Rs 14.94 on the BSE on back of three-fold jump in trading volumes. Jaiprakash Associates too surged 20% to Rs 22.53, also its fresh 52-week high on the BSE in intra-day trade.

The stock gained 22% in the last two days after lenders cleared the company’s debt recast plan.

Global markets

Overseas, European markets opened lower. The Stoxx Europe 600 was down 0.3%, weighed down by a drop in the auto companies. Germany's DAX and France's CAC 40 was also down 3% each.

Asian markets ended mixed. China's Shanghai Composite and Japan's Nikkei added 0.2% and 0.3%, while Hong Kong's Hang Seng index shed 0.1%.

The US Fed's Chair Janet Yellen is scheduled to take part in a discussion in London later on Tuesday.

Investors expect her to underline her positive view on the US economy, which would support the Fed's forecast of a rate hike this year.

Photograph: Danish Siddiqui/Reuters