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Sensex Slumps 400 Points On PNB Fraud Worries; PSU Banks Dive
The Sensex and the Nifty slumped in trade today, extending the sharp fall seen on Friday as worries over the extent of the PNB fraud weighed on sentiments. The Sensex was last trading 404 points down at 33,606 points, while the Nifty was down 126 points, at 10,336 points.
Midcap and small cap stocks slump
Mid and smaller cap stocks saw a bigger impact, with the small cap index down almost 2 per cent in trade. All the sectoral indices of the National Stock Exchange were trading deep in the red. Shares of Tata Steel was the top loser in the Sensex after the company bid for Bhushan Steel.
The latter on the other hand was up 5 per cent in trade. Shares of the Kolkata-based UCO Bank fell as much as 10 percent to Rs 25.2 after it disclosed exposure to the PNB fraud case. About 700 shares gained, while 1804 stocks saw declines in trade.
PNB the worst impacted
Shares in Punjab National Bank hit a new 52-week low of Rs 118.60, following heavy selling pressure in the stock. Investors are worried that the bank could take the entire hit of Rs 11,000 crores, unless Nirav Modi's companies that are linked to the fraud payback the money.
It is not certain whether PNB would be able take such a huge hit and maybe it has to divest stakes in companies like PNB Housing Finance, to contain the huge losses. The stock is unlikely to see a recovery, unless there is good news in the form of Nirav Modi companies paying back the entire sum.
The stock has lost nearly 30 per cent from levels of Rs 160 to the current levels of Rs 118. Check stock quote of PNB here
Severe impact on PSU banking stocks
Several PSU banking stocks hit a new 52-week low. Allahabad Bank fell 5 per cent in trade today at Rs 51.45, while Union Bank dropped to a new 52-week low of Rs 111.30, while United Bank dropped to a new 52-week low of Rs 14.35.
While there is no direct link of any other government bank to the scam, analysts see sentiments taking a turn for the worse, if skeletons tumble out of the closet. Bank of Baroda and Canara Bank were the few stocks that managed to show some resilience in a falling market.
Gitanjali Gems Locked At Lower End of Filter
Shares of Gitanjali Gems hit the 10 per cent lower circuit limit with only sellers in the counter. The firm's promoter, Mehul Choksi has been linked to the PNB fraud.
Mehul Choksi is the maternal uncle of Nirav Modi. The stock price of the company has seen a sharp and sustained fall in the last few days, following the Nirav Modi scam.
Along with this a few other jewellery stocks tumbled largely on the back of some sentimental impact. There maybe some caution in lending to the sector now, given the colossal fraud that was perpetrated by Nirav Modi group of companies.
