The Sensex and Nifty slipped on Thursday, hurt by financials, while doubts whether the Bharatiya Janata Party (BJP) could prove its majority in Karnataka weighed on investor sentiment. State BJP president BS Yeddyurappa was sworn in as chief minister on Thursday morning even though his party fell short of an outright majority. He has now 15 days to prove his majority in the state legislative assembly.
Reacting to this, the Sensex ended at 35,149, down 238.76 points, while the broader Nifty50 closed at 10,682, down 58.40 points. In the broader market, the BSE Midcap and the BSE Smallcap indices rallied up to 0.6 per cent.
Market breadth, indicating the overall health of the market turned positive. On the BSE, 1,392 stocks rallied, 1,232 stocks declined, while 130 stocks remained unchanged.
The state election had a temporary effect on the markets, but macro-economic factors such as the rise in crude oil prices and inflation will have a bigger say in the medium term, said analysts. The Brent crude, meanwhile, surged above $80 for the first time since November 2014.
"While the markets opened strong but gradually drifted into the red late morning and remained range bound as better than expected results from Bajaj Capital enabled the markets recover some lost ground. But the markets started falling like a stone as Brent Crude pierced the $80 mark. A close below the 10,700 mark is considered a week close. The Nifty is now on a weak wicket," said VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities.
Index heavyweights Housing Development Finance Corp and Reliance Industries were among the top drags, closing down 2.01 percent and 1.27 percent respectively.
The major gainers on the Sensex include Coal India, Sun Pharma, Tata Motors, Wipro and Tata Motors (DVR), while ITC, Bharti Airtel, HDFC, Axis Bank, Tata Steel and Adani Ports were the major losers.
On the Nifty, the top gainers were Bajaj Finance, Bajaj Finserv and Coal India. The major losers were Hindalco Industries, UPL and ITC.
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Among individual stocks, the recent drubbing Punjab National Bank share price has pushed its market value down so much that it quotes below the market capitalisation of its subsidiary PNB Housing Finance. PNB's market cap has halved since it was hit by a massive banking fraud allegedly carried out by diamantaire Nirav Modi and his uncle Mehul Choksi.
The market capitalisation of PNB Housing Finance stood at Rs 21,199.07 crore. The m-cap of Punjab National Bank was at Rs 20,842.33 crore. With this, PNB Housing Finance has become more valuable than its parent company PNB.
Muthoot Finance fell as much 7.6 per cent after the company reported weak quarterly revenue from financing.
Tata Steel fell as much as 3.1 per cent after the company posted a quarterly profit on Wednesday on the back of a one-off pensions gain.
Among the gainers, Divi's Laboratories rose as much as 4.1 per cent after a unit in Telangana did not receive any 483 observations following an inspection by the US Food and Drug Administration. The stock settled flat at Rs 1166.
On Wednesday, foreign portfolio investors (FPIs) net sold shares worth Rs 699.22 crore, while domestic institutional investors (DIIs) bought shares worth Rs 229.06 crore, as per provisional data.