Stock markets snapped their recent recovery on Monday, with the Sensex falling 876 points and the Nifty slipping below the 23,000 mark as selling in private sector banks and information technology stocks weighed on sentiment.
Investors assessed quarterly earnings from major lenders, while elevated crude oil prices and uncertain global cues added to concerns.
The BSE Sensex fell 876.37 points, or 1.17%, to close at 73,852.90. The NSE Nifty 50 declined 257.20 points, or 1.11%, to settle at 22,888.95.
The sell-off came after a strong rally last week, with investors booking profits in several heavyweight stocks. Market breadth remained weak, as 15 of the 16 major sectoral indices ended lower. The Nifty’s fall below 23,000 also highlighted the cautious mood among investors amid earnings-related volatility.
Private sector banks were among the biggest drags on the market after investors reacted to the latest quarterly results from HDFC Bank and Axis Bank.
The Nifty Private Bank index fell 1.85%, while the Nifty Financial Services 25/50 index declined 1.38%. Axis Bank shares dropped 4.15%, while HDFC Bank fell 2.72%. Yes Bank declined 2.63% and Kotak Mahindra Bank lost 1.87%.
HDFC Bank reported a 4.7% year-on-year rise in September-quarter net profit to Rs 19,510 crore, but lower other income, higher operating expenses and provisions weighed on sentiment. Its net interest margin narrowed to 3.16% from 3.30% in the previous quarter.
Axis Bank’s standalone net profit of Rs 7,003 crore also fell slightly short of analysts’ expectations of Rs 7,124 crore. Higher operating expenses and weaker other income added to the pressure.
The reaction suggests investors are looking beyond headline profit growth to assess banks’ margins, costs and asset quality.
Information technology stocks also came under pressure after leading the market recovery in recent sessions. The Nifty IT index fell 1.28%, reversing part of the previous session’s 3.9% gain.
The Nifty Financial Services Ex-Bank index declined 1.29%, while the Nifty MidSmall IT and Telecom index fell 0.69%. Auto stocks slipped 0.69%, the Nifty Metal index declined 0.55% and the Nifty Pharma index lost 0.65%.
The Nifty FMCG index fell 1.44%, while the Realty index declined 1.20%. The Nifty Chemicals index was among the weaker sectoral performers, dropping 1.59%.
Public sector banks were a notable exception to the broad-based weakness. The Nifty PSU Bank index gained 2.46%, supported by gains in Punjab National Bank and Union Bank of India.
Punjab National Bank shares surged 4.8% after the lender reported an expansion in its net interest margin. Union Bank of India jumped 5.3% after reporting higher profit and an improvement in asset quality compared with the previous quarter.
The divergence between private and public sector lenders reflected different market reactions to quarterly results, with investors rewarding banks that showed improvement in margins and asset quality.
The decline extended beyond the benchmark indices. The Nifty 100 fell 0.98%, the Nifty 200 declined 1.01% and the Nifty 500 dropped 1.03%.
The Nifty Midcap 50 fell 1.05%, the Nifty Midcap 100 declined 1.09% and the Nifty Smallcap 100 slipped 1.01%. This indicated that selling pressure was spread across large-, mid- and small-cap stocks.
India VIX, which measures expected market volatility, rose 4.48% to 14.69, signalling increased nervousness among investors.
Crude oil prices remained elevated despite easing during the session. Brent crude was trading at $108.57 a barrel, down 1.17%, while US West Texas Intermediate crude fell 0.13% to $101.28.
Vinod Nair, Head of Research at Geojit Investments Limited, said equities came under renewed selling pressure as weak global cues and losses in private banks and IT stocks weighed on sentiment.
He said private banks remained under pressure after quarterly results and concerns over margins, while PSU banks bucked the broader weakness on expectations of relatively resilient margins and asset quality.
Nair also noted that crude prices had eased after the US waived key sanctions linked to Russia, raising expectations of increased Russian fuel supplies to global markets. However, prices remained elevated, with geopolitical tensions continuing to influence the outlook.
He added that the Nifty’s fall below 23,000 and weak market breadth reflected cautious investor sentiment amid earnings-related volatility and uncertain global cues.
Investors will track upcoming quarterly results, developments in crude oil markets and global cues for direction. The country’s largest-ever IPO, Jio Platforms, is also in focus ahead of the opening of its subscription on Wednesday.
The immediate test for the market will be whether the Nifty can reclaim the 23,000 mark and whether buying returns to private banks and IT stocks. With mid- and small-cap shares also declining, a sustained recovery may depend on improved market breadth and earnings that meet investor expectations.
Financial markets will remain closed on Tuesday for a local holiday, with trading set to resume on Wednesday.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)