Sensex falls 1%, most in six weeks, ahead of Donald Trump’s inauguration

Mumbai: The benchmark Sensex Index on Friday fell 1%, its steepest fall in seven weeks, after private lender Axis Bank slumped nearly 7% on reports of its asset quality worsening further.

Information technology and pharmaceutical stocks fell ahead of Donald Trump’s inauguration as president of the US on fears of his policies having an impact on these sectors.

The 30-share Sensex index of BSE fell 274.10 points to close at 27,034.50 points while S&P Nifty 50 index fell 1.02%, the steepest decline since 22 December, or 85.75 points, to 8349.35 points.

“The fall in market was due to weak earnings by the financials and ahead of the Trump’s inauguration” said Sundar Sanmukhani head of fundamental research, Choice Broking.

Axis Bank Ltd, India’s third largest private sector lender in terms of assets, fell 6.9%, its biggest fall in three month after its profit plunged 73% in December quarter. The bank’s slippages totalled Rs4,560 crore, of which 36% or Rs1,631 crore was outside the so-called watch-list.

“This clearly was a negative surprise, especially given the fact that 70% of the slippages came from stressed sectors like iron and steel, infra,construction and textiles. This clearly reduces the faith on the watch-list that the bank had disclosed, as the same sectors are contributing towards slippages outside of watch-list as well”, brokerage firm Nomura said in a note to its investors.

Adding to the fall, Nifty PSU Index slumped 3.1%, its most fall in a month while Nifty Private Bank Index declined 1.6%, steepest since in six weeks.

Canara Bank slipped 5% after it reported 32% decline in its net profit as bad loans continued to surge and provisions soared. Other lenders like Punjab National Bank too fell 3.1%, most in a month. ICICI Bank Ltd and State Bank of India dropped 2.3% and 2.8% respectively. Both the lenders saw their steepest decline in two months.

Investors have been closely monitoring Trump’s plans for fiscal stimulus, deregulation of certain sectors and tax reform and a better than expected China’s gross domestic product data and less hawkish comments by Fed chairmen on interest rates have failed to soothe them.

China’s gross domestic product grew 6.8%, better than market expectation. Federal Reserve Chair Janet Yellen backed a strategy for gradually raising interest rates, arguing that the central bank was not behind the curve in containing inflation pressures but nevertheless can’t afford to allow the economy to run too hot, Bloomberg reported.