The Nifty and Sensex both fell nearly 2% in trade on Monday, reflecting a broad pullback in their Asian peers following heavy losses in US stocks on Friday after the US Fed indicated it expects high-interest rates to last until 2023.
The Nifty 50 dropped 1.80 percent, or 311.05 points, to 17,016.30, while the S&P BSE Sensex sheds 953.70 points, or 1.64 percent to 57,145.22. The India VIX also rose 6.31% to 21.89 levels. Since the Fed rate hike on September 21, the Nifty and Sensex have lost 3.50% each.
According to Trendlyne data, FPIs were net sellers of ₹2,899.7 crore in the cash segment on September 23, 2022.
Meanwhile, other major Asian Indices, Nikkei 225 dropped 2.66%, the Topix also dipped 2.71%, South Korea's Kospi lost 3.02%, and the Kosdaq shed 5.07% in Monday's trade.
After stellar returns in the last two months, banking stocks are falling in Monday's trade. The Nifty Bank hit an intraday low of 38,507.45, which is 1,039 points lower or 2.62% than its previous closing price of 39,546. 25. The index finally settled at 38,616. 25, down 930 points or 2.35%.
Among individual stocks, AU Small Finance Bank is the top laggard, down 6.47% to ₹595.50 followed by Bank of Baroda, down 3.25% to ₹128.10. Other stocks Bandhan Bank (down 5.97% ), PNB ( down 5.64% ), Federal bank (down 4.93% ), IDFC First bank (down 2.98% ), IndusInd Bank (down 2.85% ), SBI (down 1.21%), Axis Bank (down 3.4% ), ICICI bank (down 2.45% ), HDFC bank (down 1.47% ), and Kotak Mahindra Bank (down 1.79% ) all ended in red.
India's banking system's liquidity has slipped into a deficit after nearly 40 months as credit demand in the economy rises exponentially. On September 20, the Indian central bank made the biggest financial infusion into the banking system since 2019. The RBI injected ₹21,800 crore into the banking system, according to central bank data.
According to media reports, the year-on-year growth in bank credit accelerated to 15.50% for the week ended August 26, 2022, the fastest in almost nine years. Total loans in the current financial year stood at ₹5.66 trillion, a growth of 4.8% as compared to -0.5% during the same period of last year.
Further, the economists from SBI, UBS, Goldman Sachs, Barclays, and Bank of Baroda are forecasting that the RBI will deliver a 50 bps in the upcoming RBI's MPC bi-monthly monetary policy scheduled on September 30. So far this year, the Reserve Bank of India has raised interest rates by 140 basis points, to 5.40.
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