Indian markets closed on a low following a decline in banking stocks on the first trading day of the New Year on Monday. The BSE ended 31 points lower at 25,595, while the National Stock Exchange Nifty closed at 8,179.
Banking stocks faced selling pressure from investors as lending rate cuts by public banks and low-cost housing schemes announced by Prime Minister Narendra Modi had a negative impact on sentiments, NDTV reported.
While Tata Steel topped the BSE performers list on Monday, Bank of Baroda, HDFC Bank and State Bank of India were among the laggards on Nifty. On Sunday, SBI reduced its marginal cost of funds rate by 0.9% across all maturities. The new rates will be in effect from January 1, 2017. The step will make home, auto, personal and other loans cheaper. The move came a day after Modi’s New Year’s Eve appeal to banks asking them to prioritise the lower and middle classes.
Eicher Motos was one of the best performers of the day, with its share price rising by 3.29% (as of 12.44 pm) on the back of strong motorcycle sales in December 2016, Business Standard reported. Housing and infrastructure companies such as Ambuja Cements, DLF and Oberoi Realty also gained. The BSE Midcap and Smallcap also outperformed benchmark indices, gaining 0.14% and 0.54%.
On Friday, Foreign Institutional Investors sold shares worth Rs 586 crore. However, domestic investors bought shares worth Rs 725 crore. Analysts said Nifty “appears to look stable now”. “However, we suggest continuing with [a] stock-specific trading approach rather [than] focusing on [an] index,” said Religare Securities executive Jayant Manglik.
Asian and European stock markets remained closed on Monday on account of the New Year holiday.