The second biggest private lender by assets ICICI Bank’s stock crashed nearly 7 per cent to an intra-day low of Rs 260 (lowest since 21 October 2017) on Bombay Stock Exchange and Rs 258.80 on National Stock Exchange under strong selling pressure triggered by the report that Central Bureau of Investigation is likely to “examine”– not interrogate the Agency clarified — the CEO and managing director of the bank Chanda Kochhar to understand the norms and procedure applied to extend Rs 3,250 crore credit facility to Venugopal Dhoot, chairman, Videocon Group, in April 2012.

A consortium of 20 banks led by State Bank of India and ICICI Bank as one of its members had thrown a credit line of Rs 40,000 crore open to Videocon which has been referred by the consortium for recovery of dues under IBC or insolvency and bankruptcy code before the National Company Law Tribunal or NCLT.

The CBI has already questioned executives and median managers of ICICI Bank after registering a PE or preliminary enquiry against Videocon and ICICI Bank. Sources said CBI is looking into allegations of quid pro quo involved in the transfer of proprietership of Videocon-run Nupower Renewables to a trust managed by Deepak Kochhar, the husband of Ms Kochhar, six months after ICICI Bank released a loan of Rs 3,250 crore to Dhoot’s Group as a member of the consortium.

CBI is also probing “conflict of interest” angle to the case since the ICICI Bank CEO was on the committee that cleared the loan proposal. The lender’s board has strongly defended Ms Kochhar denying the allegation of nepotism or quid pro quo. Irrespective of such heavyweight laggards, the benchmarks of BSE and NSE advanced on across the board buying by investors.

Dalal Street buzz says Reserve Bank of India which took flak for not taking stern action to prevent Punjab National Bank’s Rs 14,000 crore letters of undertaking fraud, has asked Axis Bank board of directors to review its decision to grant a fourth straight term to Shikha Sharma, CEO of the bank.

Axis Bank stocks also suffered sell-off but not as severe as in the case of ICICI Bank. Market sources said an investor of ICICI Bank Arvind Gupta wrote to Prime Minister Narendra Modi bringing to light the alleged quid-pro quo nexus between Dhoot and Kochhar.

He is believed to have sent papers to other regulators such as Securities and Exchange Board of India and Reserve Bank of India that has enabled CBI to register a PE. Enforcement Directorate or ED too may step in to conduct a separate investigation to ascertain whether the Dhoot-Kochhar transaction involves misappropriation of funds,discrepancies in the deal, criminal breach of trust and breach of Foreign Exchange Regulation Act or FERA.

ED has already approached Sebi for more details –and papers — pertaining to NuPower Renewables. Regardless of central agencies stepping up pressure on ICICI Bank, the 30-share Sensitive Index of BSE and 50-scrip Nifty of NSE snapped last week’s losing run and recovered to be positive to F&O derivatives’ new series for April.

The market also looked unmindful of long term capital gains tax which also came into effect on Monday. The benchmarks started with upside momentum and managed to retain it on buying in auto, pharma, IT and banks such as Kotak Mahindra, HDFC and IndusInd.

SBI with Axis and ICICI were weak on investors’ concerns. Sensex closed 33,255.36 (+286.68) points an increase of 0.87 per cent. Nifty ended 10,211.80 (+98.10) points up 0.97 per cent. Bank Nifty settled for the day at 24,328.50 (+65.15) points rising 0. 27 per cent.

Analysts said the market may trade positive expecting improved earnings by India Inc. and a few financial entities that have managed to keep their asset quality stable despite the pressure of stressed assets. I

n March foreign portfolio investors or FPIs were net buyers of Rs 7,904.85 crore in equity while domestic funds had (net) purchased Rs 6,693.91 crore worth shares. The market is looking forward to Thursday’s statement on monetary policy by RBI and the Monetary Policy Committee.

All surveys suggest the central bank is unlikely to disturb current policy interest rate structure considering slight moderation in consumer price index related inflation or CPI.