It was day of extreme volatility on Dalal street. NSE’s Nifty 50 and BSE’s Sensex 30 both opened in green territory and gained around half a percent in the initial trade. But the rally was short lived, as financial stocks, both banks and NBFCs, came under heavy selling pressure, taking the Nifty and sectoral index, Bank Nifty, deep into red in mid-session trade.
Leading the pack of losers in the financial space was Yes Bank, which lost 22 per cent to close at Rs 32.55. At this level, the bank has lost more than 60 per cent of the value at which it had made a Qualified Institutional Placement (QIP) in which the best of the names in the financial market had participated. Yes Bank was followed by RBL bank which lost 8 percent to close at Rs 300.
By the end of the day, Nifty had shed 114.55 or 1 percent at 11,359.90 and Sensex was down by 361.92 points or 0.94 per cent at 38,305.41. Nifty hit a high of 11,554 and a low of 11,247 indicating the broad range of volatility. Sensex touched a low of 37,929 and a high of 38,923 points.
More than anything else, it was the overactive rumour mills that had spread fake news about several private sector banks which lead to fear and panic in the financial stocks.
From customers facing difficulties in logging into their online account to branches of some banks witnessing massive withdrawals, unverified statements circulated on the WhatsApp accounts even after the banks named had clarified that all their branches were working fine and there was no rush to withdraw money. Also, overexposure to one particular group was also denied.
Bank Nifty, which was the at the centre of the market movement, witnessed a fluctuation of more than 1,449 points, which is close to 5 per cent on an intraday basis. It had touched a high of 29,526 while the low for Tuesday trade was 28,077. It ended the day with a drop of 1.3 percent or 377 points closing at 28,725.
The markets are closed on Wednesday on account of Gandhi Jayanti. When they open for trade on Thursday, it would be the day of expiry for weekly option contracts of Nifty and Bank Nifty. It is unlikely, therefore, that there would be any respite from the volatility, as expiry of derivative contract usually leads to several ups and downs in the market.
(Shilpa Nagpal is an analyst at Market Wizards Securities Private Ltd)