- Indian markets fell, primarily driven by private banking losses.
- HDFC, Axis Bank fell due to shrinking interest margins.
- PSU banks, pharma, metals offered some market support.
Indian benchmark equity indices closed lower on Monday as sharp losses in heavyweight private banking stocks outweighed gains in select public sector banks, pharma and metal shares. Weak global sentiment, elevated crude oil prices and concerns over shrinking lending margins in the banking sector also kept investors cautious.
The BSE Sensex tested 77,700 at closing, crashing more than 400 points, while the NSE Nifty50 settled under 24,250, bleeding close to 100 points. Although both indices recovered from their intraday lows, selling pressure in private financial stocks kept the benchmarks in negative territory.
Private Banks Weigh On Benchmark Indices
The market’s weakness was largely driven by heavy selling in private banking stocks, which dragged the broader financial sector lower.
The Nifty Bank index emerged as the worst-performing sectoral gauge, declining more than 1 per cent, as investors reacted to quarterly earnings and concerns over continued pressure on net interest margins.
HDFC Bank tumbled over 4 per cent after reporting a decline in its June-quarter net interest margin to 3.26 per cent, despite healthy growth in loans and deposits. Axis Bank also came under pressure, falling around 5 per cent after its net interest margin contracted for the fifth consecutive quarter even as quarterly profit rose 23 per cent.
The weakness spilled over to the broader financial space, with the Nifty Private Bank and Nifty Financial Services indices ending among the biggest losers of the day.
PSU Banks, Pharma And Metals Offer Support
Despite the weakness in frontline indices, several pockets of the market displayed resilience.
The Nifty PSU Bank index advanced sharply after Punjab National Bank (PNB) reported a strong set of quarterly earnings. The lender’s net profit surged 214 per cent year-on-year to Rs 5,253 crore, supported by improving asset quality.
Defensive buying also lifted pharmaceutical stocks, while metal shares witnessed fresh interest, helping both sectoral indices finish in positive territory.
The broader market outperformed the benchmark indices, with mid-cap stocks posting gains, indicating that selling remained concentrated in large-cap private banking counters rather than the wider market.
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FIIs Continue Selling, DIIs Provide Cushion
Institutional flows remained mixed.
According to the latest available exchange data, foreign institutional investors (FIIs) remained net sellers on Friday, offloading equities worth Rs 376.41 crore. However, domestic institutional investors (DIIs) continued to support the market, purchasing shares worth Rs 1,017.89 crore.
Market participants will await Monday’s provisional institutional flow data for further cues on investor sentiment.
Weak Global Markets And Rising Oil Prices Weigh
Global cues also remained unsupportive.
US equities ended lower on Friday, with technology and semiconductor stocks leading the decline. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all finished in the red, reflecting continued risk aversion among investors.
Asian markets largely tracked the weakness, while crude oil prices remained elevated. Brent crude traded above $90 per barrel, as ongoing tensions between the US and Iran fuelled concerns over potential supply disruptions through the Strait of Hormuz.
Higher crude prices continue to be closely monitored by investors due to their potential impact on inflation, corporate profitability and India’s import bill.
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