Bank Nifty plunges over 4% today; SBI, Axis Bank among top Nifty losers amid crude-driven market sell-off

Bank Nifty

• Banking stocks dropped as crude oil rose above $115 per barrel
• Bank Nifty dropped over 4 percent; all 14 constituents in the red
• Market volatility jumped, India VIX rose more than 22 percent

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Banking stocks slumped sharply on Monday, dragging the Bank Nifty index down more than 4 percent, as a surge in crude oil prices above $115 per barrel triggered a broad market sell-off. The sharp surge in crude intensified concerns over inflation and global risk sentiment. At 10:02 am, the Sensex was down 2,252 points or 2.9 percent at 76,667, while the Nifty fell 692 points to 23,759.

The Nifty Bank index dropped 4.2 percent to 55,351, with all 14 constituents trading in the red. Among the biggest losers in the banking pack, State Bank of India stock fell more than 6 percent, while Union Bank of India and Canara Bank declined about 6 percent each. Punjab National Bank shares dropped around 5.4 percent, and Federal Bank slipped over 5 percent.

Private sector lenders also saw sharp declines. Axis Bank stock fell nearly 3.9 percent, while ICICI Bank dropped about 3.6 percent, HDFC Bank declined around 3.4 percent, and Kotak Mahindra Bank slipped close to 3 percent. Mid-tier lenders such as IDFC First Bank and IndusInd Bank also traded significantly lower.

The steep decline has pushed the Bank Nifty deeper towards the correction territory, with the index now down about 8.7 percent over the past one month. Analysts said the sell-off in banking stocks reflects the broader risk-off sentiment in markets after crude oil prices surged amid escalating geopolitical tensions in the Middle East.

• Also read | Markets could see up to 10% fall on Middle East tensions, time to deploy money: Vikas Khemani

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the spike in oil prices represents a major macro shock for markets, particularly for large oil-importing economies like India. “Brent crude has spiked above $115 delivering a big oil shock to economies and markets. Big oil importers like India will be hit hard if the West Asian conflict lingers long and crude price remains high. The market will price-in the economic consequences of this oil shock,” he said.

He added that higher crude prices are likely to push inflation higher regardless of whether the increase is passed on to consumers, which could complicate the outlook for monetary policy.

Market volatility surged sharply alongside the sell-off, with the India VIX jumping more than 22 percent to 24.26, signalling heightened investor nervousness.

Technical analysts said the banking index had already been showing signs of weakness before Monday’s sell-off. According to Hitesh Tailor, Research Analyst at Choice Equity Broking, the Bank Nifty had slipped below the key 58,550 support level last week and formed its second consecutive bearish weekly candle, indicating persistent selling pressure. Immediate support for the index is seen around 56,100, and a breakdown below this level could push the index toward the 55,800-55,600 zone, he said.

Ponmudi R, CEO of Enrich Money, said the banking index is likely to remain under pressure in the near term as global uncertainty and elevated crude oil prices continue to weigh on market sentiment. “Persistent geopolitical tensions in the Middle East continue to keep crude oil prices elevated and global risk sentiment fragile,” he said, adding that the broader market could remain volatile with a downside bias unless crude prices stabilise or geopolitical tensions ease.

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