Banks drag benchmarks down by 6 per cent for the week

The pressure from banking & financial sector stocks led benchmark indices closed with weekly loses of more than six per cent. The sentiment remained negative throughout the week. Pharma index continued its good run and managed to close higher by 0.17 per cent weekly.

The benchmark indices-Sensex and Nifty closed the week down by 6.15 per cent and 6.17 per cent, respectively. The fall would further worsen if it were not supported by market heavyweight Reliance Industries Ltd (RIL), which gained as much as six per cent for the week. Other index gainers were M&M, Bharti Airtel and Sun Pharma.

The sectoral indices represented by Nifty Bank closed down by 10 per cent for the week. The banking space saw a pressure from PSUs. This was followed by financial services index, which dropped nine per cent weekly. The index was dragged by Bajaj Finance, which dropped more than 12 per cent. The weak sentiment in the finance sector is due to the uncertainty looming on loan recovery and rating downgrades in the sector.

During the week, RBI Governor held video conferences with representatives of non-banking financial companies (NBFCs) including NBFC-micro finance institutions (NBFC-MFIs), where issues such as availability of liquidity were discussed. Further emphasis would be expected on supply of credit to MSMEs, traders and customers in semi-urban, rural and urban areas which have suffered lot of distress due to the lockdown.