Global cues, along with persisting bad loan woes of lenders as exemplified by Axis Bank led to a slump on Indian stock markets on Wednesday. The private sector lender closed with a loss of 8.04 percent at Rs 486.50 after it announced a sharp drop in Q2 net profit due to a spike in provisioning for bad loans. Other top Sensex losers were Tata Motors, Tata Steel and ICICI Bank.
The 30-scrip index (Sensex) ended 254 points lower at 28,050 while the NSE Nifty closed at 8,657, down 76 points.
Axis Bank, India's third-largest private sector lender, reported 83 percent fall in Q2 net profit to Rs 319 crore from Rs 1,916 crore YoY as provisioning for bad loans rose five-fold to Rs 3,623 crore.
The bank's watch list (potential stress assets) that stood at Rs 22,628 crore as of March 31, 2016, of which 40 percent turned bad as of September 30, 2016. Fresh slippages during the September quarter were Rs 8,772 crore.
The results that the NPA woes of banks are far from over, according to an analyst.
"If recent gains in banks rode on hopes that we were at the end of NPA cycle, Axis' numbers have forced a rethink on the same. Unsurprisingly, banks led the falls today, and with more banks about to announce Q2 figures, investors are waiting to see if Axis' numbers can be dismissed as a one off case," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services said in a note.
The BSE Bankex fell 1.89 percent, triggered mainly by Axis Bank's results.
Analysts had expected a weak opening for Indian stock markets on Wednesday in view of negative global cues.
The uncertainty in the Tata Group caused as a result of abrupt removal of Cyrus Mistry as the chairman of Tata Sons on Monday continued to hit shares of group companies such as Tata Steel (down 4.01 percent to Rs 398.85) and Tata Motors (down 4.27 percent to Rs 529.50). Indian Hotels Company, another group company that owns the Taj chain of hotels, closed at Rs 121.40, down 3.38 percent.
