Sensex Finishes Flat; Bank Stocks Tumble

Indian share market began the trading week on a flat note amid mixed global markets. At the closing bell, the BSE Sensex stood higher by 34 points, while the NSE Nifty finished up by 13 points. Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 1% and 0.7% respectively. Gains were largely seen in realty stocks and power sector.

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Bank stocks were the biggest drag today after RBI had asked banks to maintain a temporary incremental cash reserve ratio (CRR) of 100% to absorb excess liquidity from the system after the government's move to withdraw larger banknotes sparked a surge in deposits.

Cipla share price finished the trading day on an encouraging note (up 1.3%) after it was reported that the company is in discussions to sell Cipla Vet, its animal health division.

Cipla share price has surged 19% in the last six months.

In another development, Global banks and rating agencies, including Fitch Ratings, Deutsche Bank and DBS Bank, have downgraded India’s growth in the wake of demonetisation of high-value notes. Fitch Ratings stated that demonetisation will have a ‘negative’ impact on growth in the short run but for the full fiscal, the GDP decline would be ‘relatively moderate’.

The ratings agency, however, expects India’s GDP growth to trend higher than China’s in the medium term, adding that it would accelerate next fiscal on the back of reforms and monetary policy easing.

The rupee was trading at 68.72 against the US$ in the afternoon session. Oil prices were trading at US$ 45.56 at the time of writing the share market news.

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