Mid-day Mood | Sensex sinks 500 pts, Nifty slips below 23,350 as Adani bribery allegations hit sentiment, hammering Adani and PSU bank stocks

Power Grid Corp, Axis Bank, Hindalco, Tata Steel and Grasim were the key Nifty gainers.

Benchmark indices Nifty and Sensex continued to trade in the negative territory in the afternoon following a sharp downturn in public sector banks and energy stocks. Adding to the misery was a $250 million bribery indictment against Gautam Adani and seven others in a New York federal court clouding investor sentiment and escalating geopolitical tensions surrounding the Russia-Ukraine conflict.

At noon, the Sensex was down 424.48 points or 0.55 percent at 77,153.90, and the Nifty was down 165.10 points or 0.70 percent at 23,353.40. About 958 shares advanced, 2354 shares declined, and 78 shares unchanged.

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"The escalating tensions in the Ukraine-Russia conflict are casting a shadow over the markets, fueling heightened uncertainty," Kranthi Bathini, Director of Equity Strategy at WealthMills Securities told Moneycontrol. "In such a scenario, most participants are likely to adopt a cautious wait-and-watch approach, keeping the Nifty under pressure." He further noted that the unfolding Adani saga has added another layer of concern, amplifying the markets' downward momentum.

PSU banks came under heavy selling pressure on November 21 as investor concerns grew over their exposure to Adani Group companies. Shares of public sector lenders, including State Bank of India (SBI), Bank of Baroda (BoB), and Punjab National Bank (PNB), tumbled by up to 8 percent during afternoon trade.

Also read: Adani Group market-cap plummets Rs 2.2 lakh crore as stocks fall up to 20% on US bribery charges

Among sectoral indices, Nifty Energy, FMCG, Infra and Bank tumbled up to 2 percent. Heavyweights like Adani Green, IOC, and Adani Power dragged the energy index lower. Auto stocks witnessed profit booking after majors like M&M, Maruti Suzuki, Tata Motors and Bajaj Auto traded in the negative.

Nifty IT, which rallied over 1 percent in the morning, also witnessed selling pressure in the afternoon as it was trading just marginally in the positive. Tech Mahindra, HCL Tech, TCS and Infosys erased most of their early gains.

Adani stocks plunged by as much as 20 percent after Gautam Adani and seven others were indicted in a New York federal court on charges of bribery and fraud. Authorities claim the defendants paid over $250 million in bribes to Indian officials to secure solar energy supply contracts, reaping profits of more than $2 billion. The flagship Adani Enterprises dropped 10 percent in early trade.

Read more: Gautam Adani, others face charges over bribery scheme: Key highlights of the 54-page US indictment

Hospitality major Indian Hotels rallied 4 percent to hit a fresh record high on upward revision in the stock’s target price by Jefferies, citing strong growth catalysts. With a 'buy' call, and a price target of Rs 900, the international brokerage implies an upside potential of almost 20 percent from the last close of Rs 754 on the National Stock Exchange. IHCL shares have rallied 75 percent since the start of the year.

"The escalation of tensions in the Ukraine-Russia war can weigh on markets. The element of uncertainty caused by the escalations is high and therefore most market participants are likely to be in a wait-and-watch mode," V K Vijayakumar of Geojit Financial Services, said. "However, any sharp slide in the market appears unlikely since the US market has largely downplayed the escalation," he added.

The broader market, comprising mid-small cap indices, mirrored overall market trends with losses of 0.2 and 0.5 percent, respectively. Market experts say that two are poised for a slight recovery in the near term as they are oversold at the current juncture.

Anand James of Geojit Financial Services remains optimistic about potential gains, however suggesting that a failure to stay above 23,565 could lead to a quick drop to levels around 23,100-22,800 on the Nifty.  He added Tuesday’s sharp drop was unexpected, especially after the earlier rise.

Power Grid Corp, Axis Bank, Hindalco, Tata Steel and Grasim were the key Nifty gainers. Adani Enterprises, Adani Ports, SBI, SBI Life Insurance, and Britannia.

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