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Market Movers: FPI selling sinks banks as Asian Paints jumps post earnings

MUMBAI: Rising concerns over credit growth and likely selling by foreign portfolio investors are quickly making banks top the list of sectors not to be in this market.

The sector tends to suffer during bouts of risk-off in global equities, as was seen so far this week, due to the large exposure FPIs have to these stocks. Dealers suggested that selling from FPIs intensified over the last two sessions, which may have contributed to the Nifty Bank index falling over 3 per cent.

On top of that, the banking sector is also facing questions over its growth runway given the cautious commentary from private sector giant HDFC Bank on credit growth. If the global growth recovery fails to reach its peak due to surging Covid-19 cases, that will have implications on growth at home.

Change in trend?

On Monday, when the benchmark indices were deep in red, their counterparts Nifty Midcap 100 and Nifty Smallcap 100 managed to suffer less. Money managers argued that this was because broader markets may continue to outperform even when benchmarks may see losses. That trend may have changed today.

Where the Nifty50 index fell 0.8 per cent in today’s sell-off, the midcaps and smallcaps fell even more. As investors become more cautious on their optimistic projections for economic growth, they are also being forced to dial back on their exuberance for earnings growth in the broader market. It remains to be seen if the excessive sell-off in midcaps and smallcaps was merely a one-day phenomenon or the long-awaited correction that some market experts have been predicting.

Floating in green

While the rest of the market was suffering, shares of were floating in the ocean of green. The company’s stock soared over 5 per cent, its biggest one-day move in months, after the optimistic commentary given by its management.

In a quarter when supply chains were affected by the second wave of COVID-19 infections, Asian Paints managed double-digit growth despite price hikes. Investors were able to put aside the disappointing margin performance by the company in the June quarter as they were more focused on the strong demand outlook that the paint manufacturer gave.

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