The stock markets extended losses to a second straight day, with the Sensex closing 294 points lower on Tuesday. The NSE benchmark index Nifty fell 98 points to end at 11,278, while the BSE Sensex settled at 37,290. That marked lowest closing levels for both the indices since August 2. The weakness in the domestic equity markets came amid further depreciation in the rupee on soaring crude oil prices, and worsened trade tensions between the US and China. Banking and financial services stocks slipped a day after the government proposed a plan to merge PSU lenders Vijaya Bank, Bank of Baroda and Dena Bank.
Declines in metal, auto and energy stocks also dragged the indices lower. Top laggards on the 50-scrip Nifty index were SBI, Indiabulls Housing Finance, Tata Motors, Hindustan Petroleum and Bajaj Auto, closing between 3 per cent and 4 per cent lower.
The Nifty Bank - the NSE's sectoral index comprising banking stocks - finished the day 1.4 per cent lower. Bank of Baroda closed 17 per cent lower while PNB shed 4.4 per cent. The Nifty PSU Bank shed 5.4 per cent as the biggest sectoral loser.
The government had on Monday proposed a plan to merge state-run Bank of Baroda, Vijaya Bank and Dena Bank, as part of efforts to tackle a pile of bad loans hurting the banking sector. The merger of the three banks, subject to approval by their boards, will create the third largest bank in the country.
Analysts said the merger plan failed to enthuse investors, and the steps announced by the government to curb rupee fall did not please the Street.
The stock markets also took weak cues from Asian peers, where equities fell, and copper prices eased after Washington announced new tariffs worth an additional $200 billion on Chinese imports. MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 per cent after escalation of trade tensions between the US and China, the world's two biggest economies.
Alleging that China has been unwilling to change its unfair trade practices, US President Donald Trump said the new tariff structure would take effect on September 24. It would be at 10 per cent until the end of the year end, and would be increased to 25 per cent from January 1, he said.
Tata Motors closed 3.5 per cent lower, a day after its unit Jaguar Land Rover said it would cut output at a UK car plant post warnings on the impact of Brexit and diesel policy.
(With agency inputs)
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