RBI's loan curbs begin to hurt bank stocks; to remain under pressure

Banking stocks are likely to face increased pressure in coming sessions, as Monday's decline, precipitated by direct retail selling, was accompanied by a rise in short positions created by domestic institutions and foreign investors closing out their positions in index futures like Bank Nifty, NSE data showed.

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While the benchmark indices Nifty50 and Sensex corrected the most in more than two weeks, the Bank Nifty spot index fell the most in three-and-a-half months.

The sectoral Bank Nifty index slumped 1.47% to 47450.25, the sharpest fall since 21 September, when it fell by 1.68%. In contrast, the Nifty and Sensex fell by 0.91-0.93% each to 21,513 and 71,355.22, while the broader Nifty Midcap 150 and Nifty Smallcap 250 corrected by 0.85% and 0.59%, respectively, the most since 20 December. The selling was led by direct retail investors, who, unlike MF investors, directly buy shares on NSE and BSE. On BSE, the client category comprising retail and HNI, net sold shares worth 1453.4 crore.