HDFC Bank drags market down; Sensex and Nifty end nearly 1% lower

Broad-based selling pressure as declining stocks exceed advancing by over two

The benchmark S&P BSE Sensex and National Stock Exchange (NSE) Nifty declined by nearly 1 per cent on Tuesday, following a sharp correction in top-weight HDFC Bank after its weight in the MSCI global standard index increased less than expected.

The NSE Nifty 50 shed 0.85 per cent to close at 24,139, while the Sensex lost 0.87 per cent to end at 78,956. Both indices are now down nearly 4 per cent from their respective all-time highs reached at the beginning of the month.

The markets also saw broad-based selling, with more than twice as many stocks declining as advancing on the BSE.

 

Experts attributed the weakness to various factors, including weak global sentiment and lacklustre Index of Industrial Production (IIP) data.

“The domestic market plunged into red in the latter half of the day amid mixed global sentiment. Recent IIP data points to lacklustre growth in the major manufacturing sector. Persistent selling by foreign funds and high valuations are further contributing to the decline,” said Vinod Nair, head of research at Geojit Financial Services.

 

Foreign investors sold shares worth Rs 2,107 crore, bringing their month-to-date selling total close to Rs 20,000 crore.

Both domestic and global markets have experienced turbulence over the past week following weak US unemployment data, which stoked fears of recession.

A report by DBS Bank highlighted that the equities risk score — linked to the volatility index (Vix) — has surged this month, reaching its highest level since March 2023, following the collapse of Silicon Valley Bank.

“The risk score could have further upside as uncertainties around the US election, market valuations, and Fed policy direction keep the market sensitive,” DBS noted in a report.

The India Vix rose 1.9 per cent to 16.2, up from 13.73 a month ago.

Among sectoral indices, the Nifty Financial Services fell the most, down 1.9 per cent. All other sectoral indices also closed in the red, except for Nifty Consumer Durables, which gained 1.3 per cent, and the Nifty IT and Nifty Healthcare indices, which ended flat.

Amid the broad-based selloff, major stocks that bucked the trend included Titan Company, Apollo Hospitals, Dr Reddy’s Laboratories, and Nestlé India.

The Nifty Midcap 100 and Smallcap 100 indices fell 0.78 per cent and 1.3 per cent, respectively.

According to technical analysts, a downside breakout may occur if weakness persists.

“A long negative candle was formed on the daily chart, moving below the immediate support of the ascending trend line at 24,300 levels for the Nifty. Technically, this pattern suggests a possible downside breakout of the range movement. A sharp follow-through weakness could confirm the downside breakout,” said Nagaraj Shetti, senior technical research analyst at HDFC Securities.