South Africa stocks down, banks hit by technical sell-off

JOHANNESBURG (Reuters) - South African stocks stumbled on Wednesday after two straight days of gains, lead by banks such as FirstRand with the sector caught in the cross hairs of a technical sell-off. Johannesburg's Banks index fell 2.60 percent, its steepest drop in six months, after its 14-day RSI, a momentum indicator tracked by analysts, strayed into overbought territory in the previous session. The sector looks ripe for more selling, based on other momentum indicators and technical patterns, said George Glynos, managing director at financial consultancy ETM Analytics. “That’s quite a big move on the Banks index; if it closes the week around these levels we will have a fertile environment for a further correction,” he told Reuters. FirstRand, South Africa's second-largest bank, ended 3.3 percent lower at 42.88 rand, the biggest decline among blue chips, while smaller rival Nedbank shed 3 percent to 237.99 rand. Barclays Africa Group, which posted a 10 percent increase in first-half earnings on Wednesday, skidded 1.9 percent to 169.10 rand. The benchmark Top-40 index dropped 1 percent to 46,591. The wider All-share index, which scaled a record peak on Tuesday, was knocked back 0.9 percent to 51,770. Decliners outnumbered advancers 166 to 132, according to preliminary bourse data.