India’s benchmark indexes closed marginally lower on Thursday as a pullback in financial services on concerns over a likely hike in bank deposit insurance coverage offset gains in metal companies.
The Nifty 50 ended the day 0.09% lower at 22,913.15, while the BSE Sensex fell 0.27% to 75,735.96.
After slipping to their lowest since early June on Friday, the benchmarks have been little changed this week.
While the recent correction has hit stocks with lofty valuations hard, it has also lowered valuations for some quality companies across the market, said Arun Malhotra, founder and CIO at CapGrow Capital.
On the day, top private sector lenders HDFC Bank and ICICI Bank fell 2.3% and 0.9% respectively, dragging benchmarks lower. Financial services index lost 0.75% after rising for three consecutive sessions.
Analysts attributed the decline to profit booking and concerns around a potential increase in deposit insurance.
The government is considering significantly raising insurance cover for bank deposits to 8-12 lakh rupees from the current 5 lakh rupees, according to a Moneycontrol report.
Indian benchmarks end flat in breather after recent sharp falls
“Higher insurance coverage would entail an additional cost for the banks. Opex goes up, in terms of insurance premiums that the banks will have to pay,” said Dhiraj Relli, MD and CEO of HDFC Securities.
Meanwhile, the metal index rose 2%, tracking a rise in global metal prices after U.S. President Donald Trump hinted at the possibility of a potential trade deal with China, the world’s top producer and consumer of metals.
The broader midcap and smallcap indexes rose 1.4% and 1.3%, respectively, outperforming the benchmarks for the second session in a row.
Among individual stocks, Maruti Suzuki India fell about 2% after its parent Suzuki Motor Corp said it planned to launch four battery electric vehicles in India by fiscal year 2030 instead of the six targeted earlier.
