Bulls retreat as Sensex falls over 500 points, Nifty tests 23,000. What's next for D-Street?
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ETMarkets.comAt 12.55 PM, Sensex dropped over 800 points to 73,924, while Nifty 50 lost over 200 points to trade below the 22,950 level. The selloff wiped off nearly Rs 2.34 lakh crore from the total market capitalisation of all companies listed on BSE, dragging it down to Rs 470 lakh crore.
Axis Bank shares tumbled around 4% to lead losses on Sensex, while shares of HDFC Bank, Infosys, Trent, HUL, Bajaj Finserv, NTPC, Bajaj Finance and ICICI Bank fell up to 2%. Bucking the trend, shares of Adani Ports and Maruti Suzuki gained up to 2%.
Broader markets also slipped into the red, with Nifty Midcap 100 and Nifty Smallcap 100 indices falling up to 0.7%. Meanwhile, India VIX, which measures volatility in the market, jumped more than 3% to cross 14.
Among the sectors, Nifty Private Bank dropped nearly 2% while Nifty FMCG and Nifty Financial Services fell over 1% each. Nifty PSU Bank index however jumped around 2%, bucking the overall market weakness. The overall market breadth turned sharply negative, with NSE seeing 2,474 declines against 894 advances, while 94 stocks remained unchanged.
Here are the key factors pushing market down today:
1) Heavyweight bank stocks fall
The heavyweight private bank stocks including Axis Bank and HDFC Bank were the top losers on the benchmark indices after their Q2 results failed to impress the market. Axis Bank shares fell over 5% after the private lender reported a 38% year-on-year rise in standalone net profit to Rs 7,003 crore for Q2FY27, but missed analyst estimates.HDFC Bank shares fell over 2% after India’s largest private lender reported a net profit of Rs 19,510 crore for the second quarter of FY27, marking a 4.6% jump from Rs 18,641 crore posted in the same period last year. ICICI Bank and Yes Bank shares meanwhile dropped over 1% each.
Also Read | PSU bank stocks soar up to 8%, but HDFC, Axis and other private lenders fall up to 5% after Q2 results. Why the sharp divide
2) Elevated oil prices
Brent crude futures declined more than 2% but still remained sharply higher than last week, trading at over $107 per barrel. WTI Crude futures meanwhile traded close to $100 per barrel. The decline came after US President Donald Trump's decision to waive sweeping sanctions on Russia, including on Russian energy. However, Secretary of State Marco Rubio said the President would take up to 60 days to assess the economic impact of the waiver.Brent crude briefly touched $110 a barrel last week, crossing that mark for the first time since May, as tensions and security threats in the Middle East raised concerns about the safety of shipping and the risk of tighter global energy supplies.
3) Weak global cues
Dalal Street is accompanying global market peers in the downturn. Japan’s Nikkei fell 0.64% while Indonesia’s Jakarta Composite crashed more than 5%. South Korea’s Kospi gained around 2% as investors bought the dip in AI stocks. Notably, Indian stocks are seen to have the anti-AI advantage, hence rise in AI stocks often result in downturn on Dalal Street.Wall Street crashed on Friday, with the tech-heavy Nasdaq plunging over 2% and S&P 500 falling more than 1%.
4) Profit booking
Today’s downturn on Dalal Street comes after the market recorded sharp gains over the past two sessions. Nifty had gained over 2% between Thursday and Friday despite headwinds. Additionally, investors are on the edge today, expecting some expiry-day volatility for Nifty ahead of a market holiday on Tuesday.5) Persistent FII outflows
Foreign investors remained net buyers of Indian equities on Friday, purchasing shares worth Rs 1,166 crore, according to provisional data on NSE. However, the purchase is negligible when compared to the massive outflows seen this month. FIIs have remained net sellers of Indian equities in nine out of 11 sessions in October so far, heavily weighing on Indian markets.Also Read | 11 years, zero net FII flow: How a $64 billion outflow erased 9 years of equity buying
What lies ahead for Dalal Street?
The momentum created by the 2.8% surge in Nifty last week and the good results from the banking majors after the better-than-expected results from the leading IT companies have the potential to keep the market resilient, said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. He however noted that the escalation of the tensions in Hormuz and the consequent surge in Brent crude to $109 will act as a strong headwind to the market.“Even though the attractive valuations of the large-caps and the appreciation of the rupee have turned the stance of FIIs towards India a bit positive, it is unlikely to sustain, given the high crude price. Large-caps outperforming the mid-and small-caps is a rational trend, and this is likely to sustain, going forward. The market actions this week are likely to be stock-specific in response to the Q2 results,” he added.
Technical view on Nifty
Markets may trade sideways with heightened intraday swings due to Monday’s weekly expiry settlement, said Hemang Gor, Senior Research Analyst – Derivatives & Technical Research, Axis Direct.Nifty holding 23,000 remains crucial, while 22,950- and 23,300-mark key support and resistance for the day, according to the analyst.