Stock markets in free-fall: Sensex tanks 1,628 pts on sharp losses in banking, oil shares

Benchmark Sensex nosedived 1,628 points or 2.23 per cent on Wednesday, marking its biggest single-day slide in more than one-and-a-half years following an intense sell-off in banking, metal and oil shares triggered by weak global trends. The 30-share BSE Sensex plunged 1,628.01 points or 2.23 per cent to settle at 71,500.76 with 24 of its constituents ending in the red. During the day, it plummeted 1,699.47 points or 2.32 per cent to a low of 71,429.30.

The Nifty tanked 460.35 points or 2.09 per cent to settle at 21,571.95, falling for the second day in a row.

Key stock indices suffered their worst single-day losses in percentage terms since June 13, 2022.

The heavy fall in the markets comes on the back of a recent record-breaking rally. The BSE benchmark hit its all-time high of 73,427.59 on Tuesday, and the Nifty also reached its lifetime peak of 22,124.15 on the previous day.

Investors became poorer by Rs 4.59 lakh crore on Wednesday due to a sharp fall in the equity markets where the BSE Sensex plummeted 1,628 points, dragged by bank stocks and weak global trends. Extending its previous day's decline, the 30-share BSE Sensex tanked 1,628.01 points or 2.23 per cent to settle at 71,500.76. During the day, it nosedived 1,699.47 points or 2.32 per cent to 71,429.30.

The market capitalisation of BSE-listed companies eroded by Rs 4,59,327.64 crore to Rs 3,70,35,933.18 crore. In two days of market fall, investors' wealth fell by Rs 5,73,576.83 crore.

Among the Sensex firms, HDFC Bank fell over 8 per cent after its December quarter earnings failed to cheer investors.

“Markets went into a tailspin led by banking stocks as HDFC Bank faltered sharply on worries of a drop in total deposits in the December quarter over the preceding quarter. The fall in banking had a rub-off effect on rate-sensitive sectors as automobile and realty stocks too witnessed frenzied selling. India's stock market valuations are expensively valued compared to other global stock indices and investors would wait for more positive cues now to extend their equity exposure. There are challenges in the near term such as persisting conflict in the middle east and worries over delay in US Fed rate cut, which could dampen investors' sentiment going ahead," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

HDFC Bank on Tuesday reported a 2.65 per cent rise in consolidated net profit of Rs 17,258 crore for the October-December period against Rs 16,811 crore in the preceding September quarter.

Tata Steel, Kotak Mahindra Bank, Axis Bank, ICICI Bank, JSW Steel, Bajaj Finserv, Maruti, IndusInd Bank and State Bank of India were among the other major laggards.

HCL Technologies, Infosys, Tech Mahindra, Tata Consultancy Services, Nestle and Larsen & Toubro were the gainers.

"A nosedive correction in banking stocks, along with concerns over delays in US FED rate cuts, impacted market sentiments. Given the elevated valuations, coupled with the fact that optimism regarding earnings and GDP growth for FY24 is already reflected in the market, triggered the correction," said Vinod Nair, Head of Research, Geojit Financial Services.

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong settled lower.

European markets were also trading with sharp cuts. The US markets ended in negative territory on Tuesday.

"Today's market fall is led by banks on the back of HDFC Bank results, showing heightened levels of credit/deposit (CD) ratio beyond RBI's comfort levels. This is the case with most other banks as well. Thus, the markets expect either margin pressure, in case banks go in for aggressive deposit mobilization, a slowdown in lending growth, or both. This development can lead to some de-rating of the sector.

"After the significant up move we have witnessed recently, markets are taking a breather, especially since market valuations are higher than historical multiples," said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.

Snapping its five-day winning run, the BSE benchmark declined 199.17 points, or 0.27 per cent, to settle at 73,128.77 on Tuesday. The Nifty ended lower by 65.15 points, or 0.29 per cent, at 22,032.30.

"Today, the benchmark indices witnessed a sharp selloff, the nifty ends 454 points lower while the Sensex was down by 1614 points. Among Sectors, all the major sectoral indices were traded in the red but bank nifty and financial indices corrected sharply, both the indices shed over 4 percent. Technically, after a gap down open, the market witnessed intraday recovery but due to consistent selling pressure at higher levels, it again corrected sharply. A reversal formation on daily charts and bearish texture on intraday charts indicating weak sentiment is likely to continue in the near future. We are of the view that, the current market texture is weak but oversold hence, we could see pullback rally if the nifty succeeds to trade above 20 day SMA. For traders now, 21650/71850 or 20 day SMA (Simple Moving Average) would be the key level to watch out. Below the same, the weak sentiment is likely to continue. Below which, the index could slip till 21465-21400/71200-71000. On the other side, above 20 day SMA or 21650/71850 the market could bounce back till 21725-21750/72000-72100," said Kotak Securities.

Global oil benchmark Brent crude declined 1.84 per cent to USD 76.85 a barrel.

Foreign Institutional Investors (FIIs) bought equities worth Rs 656.57 crore on Tuesday, according to exchange data.

With inputs from PTI.

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