Benchmark Sensex succumbed to fag-end profit-booking to end 144 points lower on Wednesday after banking stocks tumbled on RBI's new norms for recognising stressed assets.
Punjab National Bank (PNB) plunged 9.81 per cent after the state-owned lender said it has detected fraudulent transactions worth $1.77 billion (about Rs 11,335 crore).
In a bid to hasten the resolution of bad loans, the RBI has tightened rules to make banks identify and tackle any non-payment of loans rapidly.
The Reserve Bank of India abolished half a dozen existing loan-restructuring mechanisms and instead provided for a strict 180-day timeline for banks to agree on a resolution plan in case of a default or else refer the account for bankruptcy.
The benchmark BSE index opened higher at 34,436.98 on positive domestic and global cues and advanced to hit a high of 34,473.43.
However, it slipped on profit-booking to touch a low of 34,028.68. It finally ended 144.52 points or 0.42 per cent down at 34,155.95.
The NSE Nifty settled the day 38.85 points or 0.37 per cent lower at 10,500.90 after shuttling between 10,590.55 and 10,456.65, intra-day.
Data released after market hours on Monday showed that industrial output expanded by 7.1 per cent in December on robust performance by manufacturing and capital goods sectors.
Retail inflation, on the other hand, eased marginally in January to 5.07 per cent — after touching a 17-month high of 5.21 per cent in December — as food prices cooled.
“Strong IIP growth and slowing retail inflation is providing some signs of stabilisation in economy. However, the broad market witnessed some volatility due to under-performance in financials. The PSU banks witnessed sell-off as RBI scrapped a number of loan-restructuring schemes which may lead to further jump in provisions, impacting profitability of these banks,” said Vinod Nair, Head of Research, Geojit Financial Services.
Meanwhile, FPIs sold shares worth Rs 814.11 crore on net basis on Monday, while domestic institutional investors bought shares worth Rs 1,342.70 crore, provisional data showed.