Sensex sinks 876 points; Nifty dips below 22,900, as private banks drag market

Benchmark equity indices ended sharply lower on Monday after two days of a rally, with the Sensex shedding 876.37 points and the Nifty tumbling to 22,888.95, as private bank stocks, mainly HDFC Bank and Axis Bank, took a hit amid weak global trends.

The domestic stock markets closed sharply lower as weakness in private bank stocks, disappointing corporate earnings and rising crude oil prices weighed on investor sentiment.

The 30-share BSE Sensex declined 876.37 points, or 1.17 per cent, to settle at 73,852.90. It had crashed 1,020.73 points, or 1.36 per cent, to 73,708.54 earlier in the day but recovered slightly. The 50-share NSE Nifty dropped 257.20 points, or 1.11 per cent, to end at 22,888.95.

Selling pressure was widespread across sectors, with almost all sectoral indices on the National Stock Exchange closing in the red. The Nifty PSU Bank index was the only major sectoral index to finish in positive territory, rising 2.41 per cent.

Shares of HDFC Bank declined over 2 per cent after its September quarter earnings failed to cheer investors.

UltraTech Cement, Infosys, Bajaj Finance, Trent, NTPC and HDFC Bank were also among the major laggards. Adani Ports, State Bank of India, Larsen & Toubro, InterGlobe Aviation and Maruti Suzuki India were the gainers.

Indian equities came under renewed selling pressure, reversing the recent recovery as weak global cues and selling in private banks and IT stocks weighed on investor sentiment.

PSU banks bucked the broader weakness, supported by expectations of relatively resilient margins and asset quality.

Foreign Institutional Investors (FIIs) turned buyers on Friday after days of relentless selling. They bought equities worth Rs 1,165.92 crore, according to exchange data.

Brent crude, the global oil benchmark, declined 1.07 per cent to USD 108.7 per barrel.

Oil prices continued to worry investors. Brent crude traded around $108-$109 per barrel during Monday's session, despite easing from its recent levels. The surge in oil prices has been linked to supply concerns and tensions around the Strait of Hormuz.

Reports of attacks on tankers in the region have added to concerns about disruptions to oil flows.

For India, expensive crude can create problems on several fronts. The country imports a large share of the oil it consumes. Higher prices can increase the import bill, put pressure on the rupee and add to inflation risks. They can also hurt the profitability of companies that rely heavily on fuel and other petroleum products.

Foreign portfolio investor (FPI) selling has been another source of pressure on Indian equities. Foreign investors had withdrawn around Rs 52,100 crore from Indian equities in October up to the latest available data cited in reports on Monday. This made the month’s outflows among the heaviest recorded this year.