Sensex ends 169 points down on dismal IIP data, banking woes

Indian equity benchmark Sensex dropped 1% on Friday led by the slowdown in industrial growth and Moody's negative outlook on the Indian banking system due to rising bad loans. Depreciation in rupee, rising crude oil prices and consistent problems in the eurozone were other concerns that dampened market sentiment further. The 30-share BSE Sensex fell 169.28 points, to close at 17,192.82 and the 50-share NSE Nifty lost 52.2 points, to end at 5,168.85.

S Naren, CIO Equity at ICICI Prudential feels that the market will have to live with the problems in eurozone. But according to him, the most worried fact is tax collections, which are not going up. "Others causes of concerns are - 10-year yields are going up consequently and crude oil is not coming down," he said.

Domestic as well as global factors dampened the sentiment in the truncated week, which started with a consolidation on Tuesday amid lingering uncertainty over eurozone. The Sensex saw over 200 points fall in the late trade on Wednesday followed by more than 169 points fall on Friday.

Deterioration in asset quality is the most worried part for banks, which forced the international rating agency Moody's to put negative outlook in the Indian banking system on Wednesday. This was proved after increased non-performing assets in the second quarter of SBI, which lost nearly 7% on Wednesday and 3.5% today. Even some banks planned to restructure power sector debts.

Exposure to Kingfisher Airlines (KFA) too added to the injury of banks. ICICI Bank, SBI and IDBI Bank have major exposure to debts of KFA. The stock fell 9.5% on huge volumes.

The BSE Bankex tumbled 3%; ICICI Bank and Axis Bank crashed nearly 5%. HDFC Bank was down 2.8%.