Mumbai: Shares fell for a second day on Wednesday, with ICICI Bank, HDFC Bank and State Bank of India among the losers on mounting concerns about asset quality.
“The banking sector is bringing down the market today as there are concerns regarding NPAs and high interest rates,” said R.K. Gupta, managing director at Taurus Mutual Fund.
Non-performing assets, or bad loans, are expected to rise to about 2.6% of the total assets of Indian banks in the fiscal year ending March from 2.3% a year ago, ratings agency Crisil said earlier this year.
Borrowers are facing difficulty to repay loans due to a slowing economy and high interest costs.
At 10:35 am, the main 30-share BSE index was down 0.64% at 15,771.47, with 24 of its components in the red.
“The market is likely to be quiet volatile today as the volumes are quiet low,” Gupta said.
He said the index could swing in a wide band of 300-400 points, with the expiry of monthly derivatives contracts on the National Stock Exchange on Thursday adding to the volatility.
ICICI shed 2%, HDFC Bank dropped 0.8% and State Bank fell 1.4%.
Tata Power bucked the trend and climbed as much as 4% after the utility said it would buy BP Alternative Energy Holding’s 51% stake in joint venture Tata BP Solar for an undisclosed amount.
Adani Power fell as much as 5.7%, a day after its chief executive said the company put on hold its plans for capacity expansion of 6,500 megawatts because of a lack of clarity on coal supplies.
The 50-share NSE index was down 0.8% at 4,712.50. In the broader market, there were about two losers for every gainer, on relatively lighter volume of 107 million shares.
Asian shares were subdued on thin trade, while oil kept gains from the previous day on concerns about possible supply disruptions after Iran threatened to stop the flow of oil from the Gulf.
The MSCI’s broadest index of Asia Pacific shares outside Japan was down 0.95%.
Stocks on the move
• GTL rose 4.8% after the telecom networks company said its board would consider on Thursday a debt restructuring plan. Earlier this month sources told Reuters the GTL group had received final approval from lenders for restructuring loans worth Rs16,000 crore.
• Auto component makers Exide Industries, Apollo Tyres and Bharat Forge lost between 0.5% and 1.9% after brokerage CLSA reduced its FY2013-14 earnings forecast by 3-8% and maintained underperform rating on the stocks.